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The Humpty Dumpty Economy
by Mark Skousen
Posted 11/26/2008 ET
We’ve gone from a Goldilocks economy to a Humpty Dumpty economy. I see years of stagflation ahead. At best, expect a combination of slow growth and renewed inflation over the next few years.
America in 2009 will never be the same. Barack Obama is right when he said that as president he doesn’t look like any of the faces on the dollar bill. We are entering stage two of the New Deal. Obama recently spent time reading about the emergency measures Franklin Delano Roosevelt took when he became president in early 1933.
FDR started his New Deal by declaring a week-long bank holiday. The way things are going, Obama may have to do the same on January 20, only it will be an invisible bank holiday. Today the Feds rescued the nation’s largest bank by making an emergency loan of $20 billion, but more importantly, TARP (the Treasury’s Troubled Assets Relief Program) guaranteed $306 billion in Citigroup’s troubled assets.
According to another economist, Richard Reich, increasing taxes on the wealthy is the ONLY way to go. Because the wealthy don't invest in jobs or expansion: they invest in money or overseas. Which is exactly what has happened under Bush's tax breaks for the wealthy. And part of the reason we are in this mess.
And here's an article by Paul Krugman, the recent Nobel winner in Economics, from 2003:
Another one:
Paul Krugman on the Great Wealth Transfer : Rolling Stone (http://www.rollingstone.com/politics/story/12699486/paul_krugman_on_the_great_wealth_transfer - broken link)
And another interesting article, also referencing Krugman:
If the wealthy really reinvest the money into the US then I can see the repub line of "increasing taxes kills jobs". However, I do not see the wealthy doing this. Tell me how many jobs the CEOs of GM, Lehman brothers, etc have created with their millions in pay and benefits. How many jobs has Eminem or Nickelback made with their personal funds. Has O'Reilly funneled some of his own money back into his own show and his own staff? I just grabbed a few examples I could think of. While I'm sure some business owners do put money back into their own businesses, by and large the wealthy, or at least super wealthy do not. Therefore, taxing them a further 3% should be extra money in the coffer with no hit to anything but the overseas accounts and some hedge funds (which are probably all cleaned out now anyway).
I'd welcome statistics that prove me wrong, as I'm going based on what I see, hear, and read, and have no real hard numbers to back up what my common sense tells me.
If anything, increasing taxes on the so-called wealthy (i..: those who handled their money wisely and put it in savings, gold etc.) simply increases their efforts (usually successful) in transferring their money out of this country. If it were traditionally safe from routine confiscation here, why would they have had to relocate it? I'm so far from being wealthy, and yet I'm likely going to transfer funds to some bank in the Caymans or somewhere (ain't sayin' where! Nyahhh!).
Those who are at the bottom edge of some arbitrary ranking of wealth will, after gov'mint predatory confiscation, then be what? Middle income? On their way to being mid-low income? And then when they are "dis-employed", and asking, righteously, for some income re-distribution, where will those funds then come from? Which bottomless pot?
A bunch of terrified rats, all scrambling around looking for something to rip out of the jaws of their equally terrified cohorts, just to feed themselves. As I noted elsewhere, do these newly up-financed egalitarians then "set to" the job of bumping up their own earning power? Do they invest in their own adult re-education? Do they get rid of their credit card debts and then burn the cards? Or do they hasten down to Costco and buy a new wide screen HD TV, a 24-pack of good old Miller GD, and a new Chinese-made polyester robe for "the old lady"? Hmmm?
Social engineering experiments with a bunch of demanding yet expectant rats looking for "change". Wow. This'll be fun to watch, even for a non-Republican like me! Betcha the Dems will continue to lay it all on the Reps, which, if I were one, would be real insulting. To the level that I'd be hiding ALL of my hard-earned moneys. Remember that word, Ratties: EARNED, not stolen nor fraudulently acquired. Some of them yep. But all of it? C'mon people; how dumb do you take us for? Go find someone stupider to blame it all on.
I've been retired for nearly 10 years, and I am not about to let Obama steal my IRA to "spread the wealth." Such as it is, I knew six months ago that the writing was on the wall for an economic catastrophe, thanks to the likes of Harry Reid, Nancy Pelosi, Barney Frank, Chris Dodd, whose presence is obvious all over the happenings of the past several weeks. For months, I have been asking the question, "Have you thought about investing in gold?"
Now we have Barack Obama to contend with, and it looks like this guy would rather end Democracy in America than admit failure in four years. It will be then when a return to normalcy and practicality will return the Republicans to power. It will be too little too late, though, since the damage to our economy has been ongoing for decades.
I'm curious as to why we didn't see our dedicated legislators talking tough, and preening for the cameras, with the bankers and Wall Streeters in the same manner they did with the auto execs.
Thanks, now I understand why Delta posted. She's part of the "OMG the sky is falling because McCain lost!" crowd. I am one of those minimal debt people, everything paid off on time, still saving, etc. and I can't see how an extra 3% will kill anyone, especialy seeing as how no one has managed to show how any of that so called wealth is actually going into job creation. All i see is "OMG I have some money probably less than $250k/year but I know Obama's going to take it all and give it directly to all the other people that clearly must not be as smart as I am because everyone else is just a beer drinking hillbilly that wants a free handout".
While there are no doubt some beer drinking hillbillies that want a handout, painting everyone besides yourself with that broad brush only makes you look foolish. I also think those "rats" will be rudely awakened when the extra tax money goes to paying down the debt (or the bailout as it's sucking up all the money now) and not to them. Last I saw the proposed income tax increase was an additional 3% over the first 250k. So please tell me if you're pulling in (for sake of easy math) $350k, how that extra $3k to reign in the defecit (a republican stance) that was CAUSED in large part by big boy dubya is going to radically change anything in your life. Do you spend so much money that making $347k minus current taxes will cripple you while $350k minus current taxes will not?
I've been retired for nearly 10 years, and I am not about to let Obama steal my IRA to "spread the wealth." Such as it is, I knew six months ago that the writing was on the wall for an economic catastrophe, thanks to the likes of Harry Reid, Nancy Pelosi, Barney Frank, Chris Dodd, whose presence is obvious all over the happenings of the past several weeks. For months, I have been asking the question, "Have you thought about investing in gold?"
Now we have Barack Obama to contend with, and it looks like this guy would rather end Democracy in America than admit failure in four years. It will be then when a return to normalcy and practicality will return the Republicans to power. It will be too little too late, though, since the damage to our economy has been ongoing for decades.
Obama's not interested in "stealing" your IRA. But you might want to look around at the friggin' NIGHTMARE this country has become because of the President YOU voted for.
Honorable people step up to the plate and admit when they are wrong. The way you neo-cons are whining, and the hatred you are levelling against a man who hasn't even become President yet, shows you up for the greedy and hateful cowards that you are. Thanks A MILLION for voting for a CRIMINAL in 2000 and 2004. AMERICA THANKS YOU SO MUCH.
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Rats! Damned RATS!!!!
I'm with Rifleman.
