Redneck Review
No. 20 9/7/15
The past couple of weeks the question has been posed, "Just who is in charge here?" In Review 18, it was asserted that a big cause of the current disasters around us is..."humanity's conviction that WE are in charge", especially that of our experts!
We quoted former Fed chairman Ben Bernanke, saying, "We conclude that, under our paper money system, our government can always generate higher spending..."
That comment was made in 2002, and today is totally out of date, as we are told that paper money, checks, even credit cards will soon disappear, as many current and more transactions in the future will involve a simple electronic transfer.
We are already there! The huge $19 trillion debt saddling our nation today resulted from simple electronic loans to our government. No gold, no hard cash, no paper money, no credit/debit card swipe was needed! Just a few keys tapped on the appropriate keyboard, and bingo!!!...An electronic loan appears in our government's accounts!
Which makes it very simple for the John Maynard Keynes men to "control our economy" by fiscal and monetary policies which can "apply the brakes" when needed, and "push the accelerator" as is deemed necessary! Without being technical, we will only insert here that government's hand in this CONTROL involves FISCAL POLICY, which is simply the manipulation of tax rates, bond sales and redemptions, more or fewer grants, while the FED uses its MONETARY POLICY of adjusting interest rates, controlling bank reserve requirements, and decisions on bond sales and redemptions.
The Keynes theory dominates government money policy in the entire world today...very good! When times are tough, and recessions threaten, simply coordinate GOV and BANK action to pour more money into the economy! Bingo! Good times!
But when economies start to overheat and roar out of control, just signal GOV/BANK coordinated action to "apply the brakes" and bring things back to normal! Wow! No more excessive peaks and valleys in our economy! Who can argue with that!
But, current economic news states bluntly that IT IS NOT WORKING! All around us are nations in deep debt, and dire economic situations, Greece is the tip of the iceberg, but China, and even our old USA are showing signs of economic sickness! I wonder why?
Well, it should be somewhat simple to see! Any GOV/BANK finds it easy to use their tools to stimulate an economy that is sinking and enduring a recession! We have seen it in action here since 2008! The citizens love it..., especially the near zero interest rates which predictably make it easy to borrow... and invest in a surging stock market!!!
But, dare a government trying to win elections "apply hard the brakes", when an economy under its control, especially the stock market, surges to new record highs? Hey, will the voters tolerate such "braking" action?
Hmm? I wonder if the claim of Alexander Tyler 200 some years ago that "A democracy is always temporary... it cannot exist permanently... because ...the majority always votes for... the most benefits from the public treasury" ...is happening today here and in the world?
Jake Wren

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