Atrios is an economist and reminds us of an option not taken:
I don’t think Bernanke can legally start mailing checks to
us, though I think when he hits the “emergency powers” button he can
probably do just about anything, but it isn’t said often enough by the
right people that there are alternatives to giving free money to
banks, such as giving free money to me. At this particular point in
time, those alternatives are clearly superior.
We have a problem that can be easily solved by giving free money to
people, perhaps the most popular solution to a problem ever. And it
He must have read an old post by Mike where he suggested the Fed allow the citizen bypass the commercial banking sector and bank directly with the Fed.
I mean why should I not beable to take advantage of computer technology? I have to pay direct my payroll deductions now instead of making the deposit to the local bank.
If you are going to look at it in such a fashion, the $180 billion which went to AIG which Goldman helped to sink. Why couldn’t that money (or similar) been used to rescue mortgages? At $100,000 a piece, 1.8 million mortgage holders would have been rescued from default and foreclosure. $trillions to rescue Wall Street and TBTF and not one cent for the people of Main Street.
This is actually different from letting people bank at the Fed. This is having the Fed give free money to the public rather than free money to banks.
I did have something along these lines, though, here:
From the “Economix” blog, citing a recent CRS study:
“The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.”
Thought you should know…
That is my point. I believe the last great one we had with mortgage failures (not the S & L stuff) they did rescue the people which then fed the banks. You know, trickle up.
My point is as Run makes. If I can currently deposit direct to the gov, then the next step is as you suggest direct banking, after that it’s easy to just put the money from the fed into my account… as easy as it is to sell it to banks at negative interest.
I guess someone has discovered Mike’s book. 🙂
Thanks for posting the reference K Harris. Of course Mike has been saying it for years (and backing it up with statistical evidence) and most of the rest of us knew it even without Mike’s analysis. The point is that “supply side economics” is nothing more than the voodoo that Bush the smarter said it was. The GOP can not just come out and say we only care about the already rich, so they trot out their mythology that the rich are job creators and that lower taxes on the rich will grow the economy and that all business needs is to be unshackled from burdensome regulations. The shame is that the socalled ‘liberal’ media give this hokum a pass.
With productivity outrunning the size of the labour force (i.e. too many horses, not enough plows) one clean transition for the economy would be to shift to a dividend system, where US citizens earn an annual dividend as shareholders (individual shares not salable or transferable, of course) in the nation.
That model could be slid over by way of the current (stupid) narrative in which every damn thing is supposed to be run according to a business model. “Shareholders” are valuable, whether they work or not. No-one expects other sorts of shareholders (IBM, Apple, Cisco etc) to work for a living, but if they choose to work that’s cool too. The “lazy bum” imagery could die on the vine if we chose to reach back in time to the WWII era model of Americans as shared supporters of a common American dream.
What’s in it for business? How about a stable customer base?
The alternative seems to be a nation divided, like a freeway running next to a scrapyard — half the cars zooming along, the other half crushed for scrap metal or cannibalized for parts.
By the way, the CRS paper just goes on and on with its stinking “facts have a liberal bias” analysis. One thing that lowering marginal tax rates does do, according to the CRS, is increase wealth disparities.
Look for the name “Thomas Hungerford” to be dragged through the talk-radio mud. He’s the lead author.
The “emerging nations” meme took care of the argument about needing a stable customer base.
This meme is why Walmart is still growing…outside of this nation. Such growth has been large enough to offset the loss/decline of growth here. Offset for the corp that is, not the nation.
Regarding Thomas Hungerford study (did not know what CRS was, hum…)TPM is presenting the study with the headline:
Tax Cuts For The Rich Do Not Spur Economic Growth: Study
I notice the last line of the intro to the report hedges its self: The evidence does not suggest necessarily a relationship between tax policy with
regard to the top tax rates and the size of the economic pie,…
As he explains away his rising lines of the chart of tax vs savings or GDP he loves the phrase: “…could be coincidental or spurious…”
Dan mentioned “The “emerging nations” meme…”
And ordinary Americans don’t realize the obvious implication?
If “emerging nations” are both the current and future manufacturers, and “emerging nations” are also the future consumers, then what is America? A gated community for the 1%?
As I have mentioned on several occassions and in emails, the US is the largest consumer nation in the world. If we ever got it into our minds, we could bankrupt a MNC easily. If you ever looked at the Johnson quandrant, we play the role at the fattened cow financing all of these companies expanding into developing countries which are not doing that well under the same MNC scenario either. It is all about short term profits and capital with little coming back to Labor from productivity gains.
What is ominous is the threat the Cisco CEO made on 60 Minutes. They want lower income taxes and the ability to repat ~1.5 trillion at a 5% penalty. If they do not do it, then they will continue to keep Labor overseas in newly built facilities and sell their product here in the US. Given both scenario A (above) and scenario B (2nd paragraph), what would you do?
Obama meme “you did not build this alone” is entirely too correct. No business man would be successful without consumers except for one “Finacial Services.” This particular segment is the fastest growing segment of our GDP, adds nothing to Labor, concentrates on Capital, and is gambling at its ultimate (they gamble and we pay to back up their mistakes). Make sense?
kharris – Thanks. I had seen another reference to that paper, but your comment made me hunt it down.
“If you are going to look at it in such a fashion, the $180 billion which went to AIG which Goldman helped to sink. Why couldn’t that money (or similar) been used to rescue mortgages?”
Because Rick Santelli went ballistic and the Tea Party burst forth from his fevered brow.
I understand your answer [except in French :)]. I guess I am not tied to Norquist, Tea Party, ALEC, Koch Bros, etc. and neither did I sign any pledges. I could care less what they think and wonder where or what their represntation means if they can literally destroy a nation.
A good read: