“The people are naturally conservative. They are more conservative than the financiers. Those who believe that the people are so easily led that they would permit the printing presses to run off money like milk tickets do not understand them. It is the innate conservation of the people that has kept our money good, in spite of the fantastic tricks which financiers play, and which they cover up with high technical terms. The people are on the side of sound money. They are so unalterably on the side of sound money that it is a serious question how they would regard the system under which they live, if they once knew what the initiate can do with it.” Henry Ford
I am writing this article with some trepidation as a literary economist without formal training. It is somewhat schizophrenic. But to quote a friend, you don’t have to be an expert mathematician to understand mathematics.
Consider that your hard-working family is on a beer budget but drinks champagne and cognac daily. There is no reason to change your habits because you have lenders that keep extending you credit. Your adult family members think that the good times will last forever. If you think that this piece is about your relatives or neighbors that refuse to live within their means, you are somewhat mistaken. This piece is about your lenders and how they are managing to acquire so much money to lend. Your lenders have your permission to act on your behalf. It is my view that this policy as practiced is unsustainable.
The stimulus checks of $1400 for single citizens and $2400 for married filing jointly, plus $600 for children was necessary to temporarily ease the suffering and stave off massive social unrest. With 40 million unemployed, the risk of falling through the safety net threatens livelihoods and the stability of the nation.
Did we have $2 trillion in the bank to pull from and respond to an extraordinary crisis sparked by this COVID- 19 pandemic? Our government had courageously acted before to secure the general welfare of the people. Following the great depression, Roosevelt and the Progressives pumped dope money into the economy to fight unemployment. Too many people had wrinkles in their stomach and a nickel and nail in their pocket. Put a Mississippi saxophone-harmonica- with this meme and you have the BLUES. John Lee Hooker called it BIG BOSS MAN. Roosevelt pioneered the Civilian Conservation Corps, Tennessee Valley Association and other government sponsored work. Of course, the budget ballooned, and the national productivity rose. This was good government because the welfare of people is the ultimate end of good policy.
Then as now, money had to be created to be loaned to state authorities and industry. This money is not directly created by the federal government but is manufactured by a special monster called the Federal Reserve which is a series of 12 Private shadowy banks. In my 70+ plus years I have only personally known one person to be on this board. This monster sends the dollars to the Treasury Department to distribute to US citizens. The Federal Reserve can expand or contract the money supply in the country at will.
Are the lenders- The Feds- getting this money out of thin air? The United States had collateral for its currency until about 1971- about the time of the Vietnam war. The collateral was Gold. Gold was abandoned in favor of the confidence of the citizens of the US backing the dollar. The gold standard will not be back.
After all, we are the sole superpower on the planet, but clearly the US is in decline. Yes, citizen confidence backs the production and distribution of dollars.
Now, as I back down from the fiscal prudence argument, let me advance and promote the argument for this $2 trillion infrastructure supernova stimulus bill.
We can produce smart bombs, but we cannot fully test 50 percent of the population or repair 10,000 deteriorating bridges.
Meanwhile, nearly 600,000 US citizens have perished from the virus from hell and the party goes on. 40,000 children have lost a parent during the pandemic. The CEO’s golf and eat goose liver while millions are protesting inequality and injustice. Many politicians and robber barons are busy looting the treasury. Millions are preparing to get their hustle on. Nevertheless, a fourth stimulus might be in the works as the Chinese, Japanese and the Europeans buy more Gold and US Treasury bills. Respected minds are suggesting that at least $10 trillion are needed. to right size the American supertanker.
God forgive that they demand repayment.
During the time of President Dwight D. Eisenhower, the highest tax rate was 94%. The top 10% absorbed most of the tax burden and for the Biden infrastructure plan to succeed, taxes on the rich and corporate will have to increase. Let’s pray that the lower middle and middle class don’t have to endure higher taxes and usher in inflation. Neither do we want higher taxes for our children and grandchildren because of higher prices. Higher taxes are coming for our children and grandchildren, falling prices are here but a cruel tax called inflation (rising prices) maybe waiting at the door.
Biden-Harris with guts like we can’t believe, is proposing reversing the low intelligence stable genius tax cuts by raising the corporate tax rate to 28%. Treasury Secretary Lady Janet Yellen is focused on enacting a global minimum corporate tax that would prevent the flight of capital to countries that are floormats for robber barons that trumpet the fiction that they are “good corporate citizens.” This action would shut down the global fox dens.
Lenders appear to have abandoned the idea that the Federal Debt can ever be eliminated. Key economists, including Nobel Winner Paul Krugman appears to have conceded to the view that continued productivity (Gross National Product GNP) precludes the need for radical fiscal restraint (change in monetary policy). This also translates as deficits do not matter.
Your household is not the government, I do understand. The Bible teaches that the borrower is slave to the lender. The wicked creditor can be cruel when he ups the ante and calls for payment of the debt. Jeezus, there are not any hard assets to reclaim. The predatory pawnbroker wants hard assets-cars, houses, gold bullion, diamonds, tools- before he separates from his money.
Loose printing of milk tickets ($$$) when 40 million are unemployed will temporarily plug the dam.
Get excited about this monumental shift for 40% of the money is targeted towards black and people of color communities. This is bigger than the Great Society of President Lyndon Johnson. It means that we have crossed the Rubicon. It is advisable not to say the word- Democratic Socialism, but we understand that the redistribution of wealth via the stimulus is a policy determination to employ new social and economic interventions to promote social justice. Progressives have taken the mandate from the 2020 voters to keep a mixed economy and make the society fairer. This 2T infrastructure plan is an admission that the market has lost its magic for the average citizen. This is my code word for the newer NEW DEAL that is designed to ensure a living wage, productive work, universal health care and affordable housing and education for all. We are at cusp of a European style social democracy-long overdue.
Don’t forget that the Biden-Harris progressive multiplier can walk with you but not for you.
Let us figure out and unite behind the wisest policy for survival and prosperity before the music stops. A supermajority is not needed to pass this game changer.