Everything is Under Control
I know I should just throw some Metallica in the CD player and drive along in oblivion, but instead I listened to NPR this morning. Today we learned that the economic crisis happened because consumers panicked when the market crashed, and people decided to cut back on their spending. This slowed down the velocity of money. (The velocity of money is apparently how fast we wageheads spend it once we get our paychecks.) We also learned that Uncle Sam
printing money releasing money into the system helps.
Helps how? Let’s say the economic system was in trouble because of debt. Let’s say that a large number of people were underwater on their mortgages and maxed out on their credit cards. Let’s say the financiers were calling this debt, and the anticipation of their continued ability to collect on it, an asset. Let’s say the value the financiers put on this debt-asset was somewhat greater than people’s actual ability to repay it. Furthermore, let’s say the value of the assets that the debt was incurred to purchase went down rather than up (in the case of the mortgages,) or was worthless to begin with (in the case of credit cards.) Just for grins, let’s also say the financiers were charging usurious interest on the debt, putting even more strain on borrowers’ ability to ever pay up in full.
What would a state beholden to, and interested in serving its citizens, with eleventy-trillion dollars to burn, do to help in this situation?
Empower people to reduce the amount of unrealizable debt they owe? Curb the financiers’ ability to charge excessive interest? Or would it curb borrowers’ ability to reconfigure their debt through bankruptcy protection, and empower the financiers’ with massive injections of capital to, what, cook the books? Pad their bottom line? Skim a few billion off the till in executive bonuses?
Which course would a state beholden to, and interested in serving moneyed interests take?
No need to concern our little selves with questions like these, because whatever it is they are doing, whoever it is they are serving… it’s working! According to the lede for that NPR report:
A consensus is emerging that the global economy is close to bottoming out and that the beginning of a recovery should be evident later this year. [NPR]
Look for more, even less coherent bonus material under the second cut…
The marginal theoretician is left to wonder whether The Economic Crisis was an election/first-hundred-days timed, dog and pony show to put the screws to us wage junkies whereby, ala Owen Paine, “the credit ration system, by pulling in its markers, usually can keep wages the hell out of profit’s hair.”
Perhaps the promised recovery is just the market’s reaction to the president’s success in eliciting a voluntary pledge from the health industry to slow the rising cost of keeping people alive. Sure to make every bit as much sense as Maine’s school consolidation scheme.