Saturday, August 31, 2013

No Jam Ever Again

"The rule is, jam to-morrow and jam yesterday – but never jam to-day."
The White Queen says this to Alice in Lewis Carroll's Through the Looking Glass.  However false the hope is, the White Queen at least holds out hope that tomorrow will be better than today. Our planners do not give us even that much encouragement any more. It is all about scarcity and doing more with less – more for them, less for us. Peter D. Schiff's 2012 book The Real Crash is a case in point. His idea is that unless we take steps, there will be another economic crash even bigger than the last one. He says,

"My prescription ... is this: we need to stop bailouts, government spending, government borrowing, and Federal Reserve manipulation of interest rates and debasement of the dollar. ... We need to let wages fall, allow people to pay down debt and start saving, and allow companies to make capital investments so that America can start making things again."

This does not make much sense on the face of it. How would letting wages fall allow anyone to pay down debt? This is a very peculiar construct that does not have logical meaning. Perhaps we will understand it better if we assume it has political meaning. If we interpret "let wages fall" as more unemployment and "allow people to pay down debt" as the unemployed defaulting on their mortgages and losing their homes, then it starts to make sense. In support of this interpretation, Schiff later says,

"My proposal is to soften the blow. Instead of a violent crash, my plan would give us a painful, but limited, recession."

Well, thank you for another painful recession, Mr. Schiff, one that might – maybe – "soften the blow." Not to mention giving rich people like you another opportunity to kick us out of our homes so that you can buy them on the cheap.

How about a different plan, Mr. Schiff? How about we inflate the dollar by a factor of two so that it becomes twice as easy for us to pay for our homes? Sure, that would cut your wealth in half, but that seems more fair to us than your plan. Your plan would leave us with nothing, and you rich people have already done that to us before.

You talk about moral hazard, Mr. Schiff, but you do not seem to realize that moral hazard is a danger only for the rich, not for the poor. Only the rich have enough control over other people's money that mismanaging it can bring down the whole economy. At we like to say, "Moral hazard is a banker with an idea." Or just, "Moral hazard is a banker."

Finally, how about an even better plan, Mr. Schiff? Why don't we send you and your rich friends off to play in your own monetary sandbox? A place where you can no longer threaten the rest of us with "painful recessions" as cures for economic conditions that you create. That is what is about. We propose multiple exclusive currencies and markets so that you and the other rich can plan recessions for yourselves if that is what you want, leaving the rest of us alone.

The rich are preparing the rest of us to accept "austerity" as our inevitable future. "Austerity" meaning poverty, of course. They provide all sorts of reasons. Peter Schiff's reason is to head off a supposed "even worse" economic meltdown. His reasoning is bogus, but will appeal to many other rich people. Against their poverty plans, proposes that we separate our money from the money of the rich. That way, they can no longer plan recessions for the rest of us.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (

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