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September 23, 2014


We saw in part one that the dirt sheet financial press and other corporate-owned media amount to little more than propaganda organs for austerity-loving Wall Street bankers and its bondholders, cheap interest rates for leveraging of hedge fund operators and the like, whose overall profitability austerity economics virtually assures while impoverishing the rest of us. From the stance of a God-like supra view of what is happening in this economy (and what isn’t but should be if we had made sane policy choices), it’s as though those in Congress are mired in the delusion that trickle down from the nation’s treasury begins and ends with the corporate and investment class. The buck, literally, stops THERE, and, worse, it’s OUR BUCK that is financing this economic charade where the poor and middle class not only finance but even provide bailout funding for the congressionally-favored class to traverse the globe with its crapshoot lending and investment games at OUR RISK, given our “TRICKLE UP” political commandeering.

With some 318 million people in this country, nearly all of whom are not within this favored class, such a politically mandated arrangement of resources to the few with right to work laws and wage inequality for the rest of us gives the term “lopsided” a whole new meaning.  It resembles a national theft purchased by campaign contributions and revolving doors far more than a considered choice of policies that would benefit the vast majority of Americans and our standing in the world of international finance, as Piketty properly notes in his criticism of our policies for the last 30 years. He is right. We are pursuing policy courses which are not only domestically disastrous but internationally disastrous as well, as demonstrated by the now-threatened loss of the American dollar as the world’s reserve currency (which it has been since the Bretton Woods Conference in 1944, where the great economist John Maynard Keynes was a British delegate to this important conclave in world economic history).

It was a last hurrah for Lord Keynes, one of my heroes in economic history, a can-do and will-do academic who died less than two years later. (Parenthetically, when asked during the midst of the Great Depression how long it was going to last and if there were any comparisons in history to such a debacle, he famously answered that there was such a time in history and that it was called the Dark Ages and lasted 400 years.) Fortunately, FDR adopted Keynesian policies beginning with the day of his inaugural to reverse our own version of the Dark Ages under Hoover during the Great Depression and we were well on the road to recovery when WW II intervened in history, a fact that the dirt sheets and Wall Street do not want to discuss since (check the Dow) they are prospering so well under current congressional policy choices while the rest of us suffer as we continue to lose trillions in the underperformance of our economy, unemployment, stagnant or falling wages, weak demand etc.

The adoption of austerity economics can also be said to be an import of Third and (now) First World policy (from the EU where austerity is not working, either, with negative growth even in Germany last quarter) when we have not yet descended to Third World status – though we are on the road with current policies designed to make the already rich richer and the poor poorer. Additionally, and on the theoretical side, it (the choice of austerity as policy) also defies Piketty’s three centuries of research summarized in his r > g formula by expanding the r side of the equation, thus setting the stage (unless attended to) for Piketty’s conclusion with his r > g formula as a “central contradiction of capitalism” that capitalism as a system will itself ultimately collapse unless “attended to.” We therefore have our marching orders, and they can be summarized as follows: “Attend to” the causes of such a potential collapse of the system now to save it from the capitalists themselves who in their myopic greed only wish to make money today and worry about the system later. We, like FDR, labeled as socialists, are actually trying to save capitalism as a system OVER THE OBJECTIONS of the capitalists themselves, thus totally disproving such charges of socialism as ongoing propaganda designed by Wall Street to divert attention from their selfish excesses. We believe capitalism, with controls, can work; but that without public controls it will in the future fall prey to Piketty’s dour formula and itself disappear.

This part is long enough. I will continue this discussion in Part III. Stay tuned.   GERALD   E


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