QE 1 and 2 worked so well the US Fed has figured it’d be great to go for another round. QE stands for Quantitative Easing, which is a lot like printing money in common terms. The first two involved printing a half-trillion dollars each, which was used to buy near worthless mortgage backed securities from the banks at face value. As a result of those QEs and lots of other money lent to the banks at near zero interest - which, since those super-low interest rates are less than the rate of inflation, is akin to paying the banks to take that money - the stock markets are near all-time highs, corporate profits are soaring to the point that American corporations are sitting on nearly $2 trillion dollars of cash reserves and the 1% are seeing massive gains in their wealth. So it’s worked out fabulously.
Well now, that was a joke, that’s not really why they did it, or why they said they did it. As it happens, the 1% already have a greater share of national income than at any time since 1929. No it’s because they’re worried about unemployment continuing to be stubbornly high and the economy being in the doldrums for a large number of Americans. Which brings up Einstein’s definition of insanity; that is, repeatedly doing the same thing while expecting a different outcome. But feeding the banksters is the only thing they know how to do, it’s the only trick in their bag, so they have to keep plugging away at it.
With all that extra money to play with the banks - or so the theory goes - will be eager to lend it out to businesses who actually need it to do real, productive work in the economy and finally some of it will trickle down to the masses. But that involves risk, it’s much easier to take that new-found free money and buy US treasuries at 2% interest. When they do indulge in risk they speculate on commodities, which inevitably raises the cost of basic foodstuffs and other necessities of life, but hey, that’s the magic of the free market – goods and services are allocated where they can create the most benefit for those capable of paying for them.
QE 3 will mean a mere $40 billion per month, with no end date, of new printed money. It’s free money, figmentary money, conjured up out of thin air, which means, at least in theory, it should cause inflation – if you’ve got an increased amount of money relative to economic size and capacity, then each dollar should be worth less. That’s actually not happening today since in spite of the inherent weakness in the American economy and its massive public debt and budget deficits, there’s such economic turmoil in the world, the dollar still constitutes a safe bet in the minds of many people and so world investors sitting on huge piles of cash have been flocking to US Treasuries. That cheap money that’s easy to print while still maintaining value cannot last indefinitely without drastic belt-tightening changes which are extremely unlikely to happen. If/when the dollar crashes it’ll come suddenly with almost no warning.
Meanwhile as long as it’s so cheap and easy to create money with no ties to anything real, anything of value, why not use it to actually create value? Why not use it in a way that actually makes a difference for somebody besides the bankster 1%? I realize it’s an immense stretch for America’s political and financial leaders - not to mention those of the UK and EU and others who are also indulging in printing money to feed the banksters - to imagine using that imaginary money for the public good, but just in case they’re struck by lightning and come within an inch of death, or close enough anyway, to have a change of heart, here are some thoughts how that free money could be used.
Forty billion dollars would buy a new extensive light rail system for eight to ten American cities. In a few months every city large enough to be able to take advantage of efficient, clean light rail would have one. Roads, bridges, sewage systems, electrical grids, alternate energy applications… whatever, $40b per month is not small change.
The anti-poverty programs of the sixties and seventies (not to mention the programs of the Great Depression) could be resurrected. In the late seventies at the end of Lyndon Johnson’s War on Poverty, before the Reagan revolution changed the US government’s focus to a war on poor people, I participated twice in the make-work, CETA – Comprehensive Employment Training Act – program. Anyone who was out of work for more than a year was eligible.
The first time I helped build a play structure in a small church-owned but publicly accessible park. CETA provided our wages and a small amount of money for administering the contract. The artist/sculptor who they wanted to do the job wasn’t eligible so I agreed to take the job but then work half time and share the pay with him. It was a six month contract which paid $833 month - $10,000 on an annual basis. Not a lot of money even back then, but enough to keep from begging or depending on other people for housing and food. CETA jobs lasted a maximum of one year and weren’t intended to be comfortable jobs but only tide you over until you could find a ‘real’ job and hopefully learn something in the process.
Just after that contract ended another CETA job opened up in a community recycling program. The business in question had been picking up food waste but didn’t have a good method for processing it. It’s great stuff when composted but super grody and a bear to deal with. That was a year’s contract for four staff. We learned a lot about composting that year and produced a decent report, but frankly the subject matter didn’t really warrant four people working full-time for a year. The occasional boondoggle aspect was one of the reasons conservatives hated the program so much. Still it kept us (me anyway) off the streets and provided a survivable income.
It also introduced me to a group of people doing a recycling program where I eventually spent 13 years and it became the major focus of my working life. And I was able buy a house on contract because I had a steady income for a year and a half which gave the seller confidence that I could make the payments. Today it’s tough love for the people, welfare for the banksters.
As long as QE money is ‘free’, not costing anybody anything (aside from the future possibility of inflation), not connected in any way to productive endeavor, now only going to line the pockets of the country’s wealthiest citizens, why not spread some of that largesse around? Why not get people working, provide a little hope for the future and a little pocket change for the present? Never. Cannot happen. The poor barely exist in the American political lexicon, now only the middle class matters and according to both candidates that includes people earning up to $250,000 per year, a figure which puts them in the top 3%.
Now the so-called fiscal cliff is approaching. According to agreements made in the past, if the Congress was unable to come up with a reasonable deficit reduction plan, there will be automatic cuts in spending and a return to pre-Bush taxes. In other words, the economy will head downhill, just as many of Europe’s economies are. It’s obvious if you increase taxes and cut public spending, then you will increase unemployment and generally hurt the economy. So now even the Repugs are turning into (back-door) Keynesians.
The only way to increase government revenue without harming the economy is by taxing the wealthy and their special breaks (taxing capital gains at less than working income, exempting inheritance from taxation and giving them a free ride on their stock transactions) since their excessive wealth does nothing good for the economy while their excessive speculation and high-speed trading are truly destructive.
Needless to say that can’t happen since they own the government.
In other news, Hurricane Sandy, a storm of unprecedented size, helped along by ocean temperatures 5º F above normal, wreaked havoc in the eastern US. Global warming, which unquestionably had an impact on the size and severity of the storm, was never mentioned in the debates for good reason: Both candidates were allowed to vet every question, neither wished to broach that uncomfortable topic. However, unprecedented storms, droughts and heat waves have a way of intruding on preordained debate questions. Without drastic changes, starting yesterday, in the way energy is produced and used in the world, and especially the US, then the worst, not to mention the unthinkable, is yet to come.
Meanwhile, after nearly two years of campaigning, the election is finally upon us. Mr. Pain Capital, who earned his money bankrupting healthy companies or sending their jobs to China is neck and neck in the national polls with Mr. Hopelessly Compromised. Still, in American elections the popular vote doesn’t mean much, it’s the votes of the individual states that matter. In that case Obama is ahead, though, as in the case of Ohio, not enough to insure against fraud and theft. He only won last time because his margin was too great to allow for Repugs to steal the election.
The reason why election theft is still a realistic possibility in spite of Bush’s boys stealing two elections in a row is that the Dumbos never thought it was important enough to pursue, uncover and root out the causes of the theft. They never thought it was important enough to hold hearings, do research, fight to have voting machines count honestly. Most of you will be amazed to learn that, according to Jimmy Carter, foremost authority on honest elections, Venezuela has the cleanest elections he’s ever monitored. Simply put, they have machines which in addition to electronic counts also produce a receipt which allows the voter to double check to make sure their vote is counted correctly. Incredibly simple.
Not in America where voting machines are owned and operated by private companies which are allowed to hide their software under the guise that it’s proprietary information. And if many voting machines in Ohio are owned by companies connected to Romney’s son or his partners at Pain Capital, where he still is reaping large returns, well, what the hell. According to the Dumbos, or so it would seem, if you’re smart enough to steal an election, then you must deserve it. Otherwise they would’ve fought like hell against the brazen thievery that put Bush into office twice.