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Wonderful life

By Owen Paine on Wednesday October 1, 2008 09:25 PM

Scenes from the Great Depression; or, economics according to Frank Capra:
"Once a bank in a given town shut its doors, all the knowledge accumulated by the bank officers there effectively disappeared. Other banks weren’t nearly as willing to lend money to local businesses and residents because the loan officers at those banks didn’t know which borrowers were less reliable than they looked. Credit dried up."

And just who's this particular idiot? Some virtual cat burglar from the business pages of the New York Times. Behold his electrified hair act as he, like his other "fellow worriers.... connect[s] the dots... to teach a little lesson on the economics of a credit crisis — how A can lead to B, B to C and C to Depression".

Ahh comrades, he's but one idiot in a chorus of idiots -- a chorus of idiots headed up by a string of distinguished lead soloists, including double-domed faux-Nobel laureates and eminent tycoons and tower sharks -- all peddling the purest brand of hooey.

These days we're getting fed nothing but a steady diet of bull goose feathers -- policy as the illusion of the impossible. What we need is a Huey Long manic boast -- a kingfisher, a dealer in miracle loaves. But we get what? We get who? Why none other than Gentle Ben Bernanke -- our livid-faced soul-sapped fed chair from old Nassau itself.

Seems Ben is in fact a former scholar of the great depression:

"As a young academic economist in the 1980s, Mr. Bernanke largely developed the theory that the loan officers’ lost knowledge was a crucial cause of the Depression. He referred to this lost knowledge as “informational capital.” In plain English, it means that trust vanished from the banking sector."
Listen, fellow saps and suckers: the Fed could loan it all -- and directly to the guys and gals that make the real wheels turn, not the hi-fi mugglers -- and at zero real cost.

If you want to think it through, try starting with this notion: activating idle resources has zero opportunity cost. If the Gub runs a big enough deficit, spends enough money, extends enough easy business credit -- well, why not? Credit costs nothing to produce, and credit is the elixir, when it flows, even indiscriminately, into our mazelike thicket of real tangible product businesses, our outfits that hire folks and put 'em to work producing actual consumable shit.

Yes they do it for for a profit and through exploitation -- but ain't it a cold existential fact that a job, any job, is better then no job at all?

Is it all a big waste? Wasting what? A bridge to anywhere built out of otherwise idle resources, no matter where it's going, no matter how marginal its additional social value -- it's better then ten thousand pairs of thumbs twiddling away on La-Z-Boys.

Fuck the fine structure, fuck "all the knowledge accumulated" by the Mr Potters everywhere. So what if "banks are hoarding capital"? We the weebles don't need their stinking capital. We got plenty of capital, social capital, capital of Uncle, from Uncle and by Uncle, and it can get spread out free of charge.

So gang, tell Uncle to start doling out the credit lines all up and down Main Street. Fuck the Rubins and the Reeds.

Fuck the Potters. Pass 'em by. Pass all of 'em.

Go to the source and fill all those greedy little hands out there ready to rumble the marketplace -- fill 'em with cash. Let America's eager grasping legion of petty for-profit outfits seek their petty fortunes out in the forum battling for orders against each others grain. Let 'em sell more I-phones. Let 'em build more sundecks and cut more blue hair. Let 'em rip and swindle and and serve more restaurant meals. Let 'em -- even if they're only in it for the money -- half-assedly care for more elders and raw kids. Let the markets roar. Let a zillion firms contend. Let's try some of this guy's snake oil for once:

Comments (4)

Peter Ward:

I'm not sure you're being literal or not--my response is assuming you are. If the state is to loan money, why not just provide welfare instead? Provide people enough for a comfortable standard of living and otherwise leave them alone. I think in the long run innumerable great things would materialize in the arts, sciences and in technology as a result. (Besides, the currently economy is profoundly destructive to the environment and to people, a fact economists, at best, politely ignore.)

One caveat, people do need to be educated in a manner that enables them to see there role in society so that the will, if not psychotic, act in a socially responsible manner--i.e., to see themselves as part of a larger organism and not, in fact, independent of it. I think at lot on the left are hung up on the naive fantasy about what I imagine they'd call "individual liberty". I'd point especially to Rousseau (perhaps Nietzsche)* as a representative of this philosophy whereas I'd point especially to John Dewey, especially in his work on education, as representative of the philosophy that I advocate. One gets branded a totalitarian and all kinds of other nonsense expressing this view, but the facts seem to point to this being the correct one, regardless what one wishes. Because we can't live as hermits from subsistence we are defendant on other people and our actions have consequences for other people as well.

*When you boil it down, Nietzsche is obsessed with power over others, whereas Rousseau seems to me genuinely liberal.


Seems like the only "informational capital" in danger of being lost consists of how to construct the sort of convoluted debt instruments that only a compulsive gambler could admire.

And I'm no expert on capitalism, but wouldn't the system work better if the productive elements of the economy were supplied with, say, capital? That $700 large could go a long way toward that end.

Peter Non-Ward: The productive elements have more capital than they know what to do with. That's a big part of the reason these bubbles keep appearing.

What they lack is new customers. As OP-san says, creating more demand from the schmoes fixes all this immediately.

Ain't gonna happen without a fight or a 1930s unemployment rate.

I wouldn't rule the latter out. Even if Wall Street gets its way, where are they going to send the next batch of loans? You can't use debt to combat shrinking pay packets forever. Eventually, there's nobody left who's "credit-worthy."

Son of Uncle Sam:

I think the Monotones left chapter 11 out of the book of love intentionally. It would've undoubtedly been synonomous w/ sexual assault.

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