Economic Policy Fiction

Does Anyone wonder where Economics goes wrong and Why it does? Read this Post! I ask first if it is natural to have a nominal Interest rate of 0%? Second, I would ask if it were natural for Banks, who are dependent or should be on their reserves, to attempt a greater degradation of the reserves by pushing Inflation? What I am trying to get at here stands that there are several things which are not truly economic policy, simply criminal stupidity. They are not even political maneuvers, as no one gains sufficiently to make the attempts profitable. Banks make higher Profits, but with need to reinvest and no viable way to hold reserves in investment, they simply lend to a business leadership which is already deluged with oversupply of Investment Cash, as their Sales performance cannot even generate need for greater production capacity. There is no additional Consumer dollars out there, they already dedicated to current expenditures or a consistent Savings pattern. Remember the old adage about beating a dead horse?

I could take the argument to the Demand/Supply curves to prove excess Capital will actually decrease Demand over time, as Consumers fear the Consumption patterns of their Peers, which is decidedly below their own. I could attempt proof that the Profitable employment of resources declines into negative territory at the incremental level with nominal Interest rates at 0%. I am not good with graphs, though, and this is one area I would not like to screw up. It all means that this artificial generation of Production through false Capital provision of no Interest actually causes a real loss of Profitability and Returns.

The same can be said for excess Tax Cuts, which do no one except the wealthy Taxpayer any Good. It allows such individuals in Management decisions to adopt quasi-monopoly Price and Production placement, set to maximize their Return without further benefit to the economy. Real Prices should have dropped somewhere around 2.1% because of the Downturn, even though the Sales performance has been higher, simply because Consumption Demand should have been much higher; it will not be without the real Prices reductions. There is a very real economic trend visible where there is an attempt to force higher Prices and Profitability from limited Sales, reducing Wage levels and Standards of Living. My response simply states this is not the way to do it, and Consumers and Households will show far greater resiliency to artificial pressures than is imagined. Current economic policy is in for a rude Awakening! lgl