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Fire away! I fear no man!

By Owen Paine on Thursday November 13, 2008 10:02 PM

Here's a fact: the ratio of national debt to gross domestic product was 1.2 to 1 in 1946. Today its 0.5 to one.

Citizen suckers, hear this: we could run up cumulative federal deficits in excess of 10 trillion dollars over the next four years, and be fiscally poised for the future, just like we were at the dawn of the cold war.

$10 trillion... that's what Obama could borrow in his first term, and end up making us all better off than we were when he arrived at the White House.

So... what to spend it on?

As some Chinese red mandarin was quoted in the press recently -- we gotta spend it "fast" and with "a heavy hand".

But here's the real point: the best and fastest first shot would be not to spend it at all, but to rebate it: send a check for last years SSI taxes to every payrolled geef and geeffette in this country, and then declare a holiday from the SSI tax till further notice.

It's ours, we earned it, so let us spend it -- or pay down debt, or whatever. Just plain dispose of it any way we want.

Then next we might think of nationalizing the HMO's, like Uncle is already doing with all our big-boy high-finance outfits. Replicate the Paulson/Bernanke/Ribbentrop bailout pact -- but not to the benefit of the silk pajama crowd. Nope. For us -- by socializing the private health insurance industry. Call it single payer by other means.

Once it's partly ours -- get every American signed up to a private plan, and have Uncle pay the first $2000k per head, as social coverage of... well... personal coverage. That oughta get the ball rolling.

Note: This rebate plan is unlike the balance-sheet plugs approach, AKA "bail the big bums out" -- or as Obama all too benignly calls it, "fixing the financial plumbing." Don't matter if it's for the banks, or the insurance companies -- balance sheet injections only benefit us jobblers directly if the pipes leak. Otherwise we gotta pray for lots of so-called wealth effects to lift aggregate domestic expenditures.

Note: anticipating that 5% of upper-crust wealth increase will get spent -- not lent-- is prolly high ...that's as far as wealth effects go.

So if the rich guys behind these faltering hi-fi firms feel restored to former wealth levels, by a trillion or two in bail bonds, then they'll spend maybe ...maybe... maybe... 100 billion more than otherwise.

Not a very high yield, eh? And so far as the "plumbing" goes -- as far as lending goes -- hey, the state of defaults makes lending increases very problematic. The bastards are unlikely to turn the taps enough, any time soon.

Whatever voodoo hoodoo might occur as a result of the series of pain-relieving Paulson corporate injections, a direct rebate to wageling households, of taxes extracted to begin with right out of their own work earnings, will hit the real economy -- the one that makes real products -- much harder. And more importantly, resurrect the job force levels much much faster. It's a virtual WPA, folks -- bootstrap macro at its finest. In fact, if the household expenditure wave is big enough, in about two or three years, when we finally have the plans for our green lean and clean sustainable production machine, we oughta see such hyper-employment conditions, and such a real wage spiral under way, and such a production capacity squeeze that... it'll knock the pips off the dice in Las Vegas.


Next post:

General product inflation is ripe for a harness. Enter the markup cap-and-trade system -- to end price pollution in our time.

Comments (2)


This is the kind of SMBIVA post that always leaves me scratching my head, not sure what it is I just read.

I may not be smart enough to write like that or to understand the meaningless jargon that is modern economics, but I do know this:

Between 1) Robert Reich's voodoo, The Mini Depression and the Maximum-Strength Remedy (11/9/2008):

"Given the magnitude of the mess and the amount of underutilized capacity in the economy-- people who are or will soon be unemployed, those who are underemployed, factories shuttered, offices empty, trucks and containers idled -- government may have to spend $600 or $700 billion next year to reverse the downward cycle we're in.

"The answer to the second question is mostly 'infrastructure' -- repairing roads and bridges, levees and ports; investing in light rail, electrical grids, new sources of energy, more energy conservation. Even conservative economists like Harvard's Martin Feldstein are calling for government to stimulate the economy through infrastructure spending. Infrastructure projects like these pack a double-whammy: they create lots of jobs, and they make the economy work better in the future."

And 2) New Scientist's science, How our economy is killing the Earth (10/16/2008):

"Consumption of resources is rising rapidly, biodiversity is plummeting and just about every measure shows humans affecting Earth on a vast scale. Most of us accept the need for a more sustainable way to live, by reducing carbon emissions, developing renewable technology and increasing energy efficiency.

"But are these efforts to save the planet doomed? A growing band of experts are looking at figures like these and arguing that personal carbon virtue and collective environmentalism are futile as long as our economic system is built on the assumption of growth. The science tells us that if we are serious about saving Earth, we must reshape our economy."

I'll take science each and every time.

Unsustainable-by-definition business-as-usual is not going to cut it. Not by a long shot.

O-bomb-a and His maniacs are all about business as usual.

And lest we forget -- as we always do in this postmodern age -- our environment (a/k/a Earth) is the real economy. Denude, exploit, exhaust and destroy the former and the latter will falter, fail and collapse (sooner or later).


If our demands on the planet continue to increase at the same rate, by the mid-2030s we would need the equivalent of two planets to maintain our lifestyles
- Earth 'on course for eco-crunch'


The bailout (revised capital-injection version) did seem to make sense, and was recommended by "economists" from the start. Inability to get short-term credit for day to day operating costs (like salaries!), even for mega-businesses like GM, threatened to stop the economy in its tracks.

However, we now find (from Calculated Risk, I think) non of the supervisory panels that were supposed to oversee the use of these capital injections have even been staffed, let alone provided the mandated reports.

Will BO change any of this? Let's see what Goldman Sachs alumnus he picks for Treasury.

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This page contains a single entry from the blog posted on Thursday November 13, 2008 10:02 PM.

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