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Michael

Elaine,
Let's ask the question, "Since income for the bottom 90% of the population has not increased (in real - inflation-adjusted - terms) since 1971, why is there such a strong feeling that the 80s, 90's and most of this decade were a period of wonderously expanding prosperity?" Try these answers on:
1. The ever-increasing use of debt by the workers-consumers in place of earned income to finance ever more upscale lifestyle (net savings went from almost 10% of income to less than 0% of income).
2. The subgroup that was around during the Depression considers everything that's happened since then to be a stairway to heaven, while the post-war baby boomer subgroup (the single biggest group) has experienced age-related income gains of individual upward career mobility. The jobs the boomers had when they were 20 now pay less than they once did (in real terms), but the boomer is now 50 and doesn't notice or care about what happens to 20 year old wage earners.
3. The surge in low-skilled immigrants since the 70's along with off-shoring has kept inflation in labor-intensive and factory-produced finished goods very low, and (with the help of ever-expanding cheap credit) the sensual pleasure of "getting more and more toys" outweighs the emotional security of having accumulated some savings. One asset bubble after another (stocks, houses, etc) helps the feeling "we're getting rich" and sustains more credit-taking while they last.
4. The official self-promoting ideology of success ("We conquered inflation," "We won the Cold War," "We kicked Saddam's ass," "We killed Union power and made profits and growth limitless", etc, etc) made rational critical examination of the steady impoverishment of the workers-consumers unpatriotic and dangerous.
Minsky Moment? Of course. And Prof. Minsky could tell you exactly what happens next: Since deflation of the credit monster would destroy the world finance system, you will see all governments which have a stake in the world finance system (just about everyone) bail out big banks and companies in distress and pump up the money supply to infinity if necessary. Inflation is a secondary consideration, that will be "dealt with" (half-heartedly and as briefly as possible) once it's clear they've survived the current crisis by sustaining bloated asset values and failing businesses. The workers-consumers will support this, as they always have, because expanding credit is the only way they can convince themselves their livestyles aren't going to completely collapse (Japan has, indeed, shown the way).

Elaine Meinel Supkis

Indeed, you are correct. But all this hinges on giving cheap loans to the middle class. In Japan, this is not so. I expect it to be the same with us all.

Run Girl

As the boys on Mythbusters would say "Now there's your problem". The idea that the banks can pump up the money supply to infinity if necessary is short term thinking. In resources, including money supply, there is no INFINITY. Eventually someone pays the price, usually the worker. When the dollar is so diluted that the cost of essentials is out of reach for the masses, who are the bankers going to be doing business with? As it is, all I see is a group of greedy fools playing Pass The Debt.

Abelian

Michael,

You neglect to mention that there has been a successful campaign by those in power to teach that financial success means that God has blessed you, and likewise that financial hardship is punishment by God.

Sam Harris has been quoted in saying that 22% of Americans are assured that the rapture and their ascension into heaven will occur in their lifetime, and another 22% believe it will probably happen.

Most of these 44% are not in the top echelon of society.

As mentioned in "The God Who Wasn't There", the collapse of society, war, famine, etc. are evidence to these people of the coming of Jesus and their everlasting happiness. Why should they care about dollars per hour or working conditions, if this is the case.

The resurgence of Evangelicalism has to be one of the answers on your list...not only of the general public, but in the minds of the military ( especially the Air Force), which is extremely evangelical.


Betty

Elaine,
Living here in Calif. (the beautiful Monterey Peninsula) can I sleep at night having nightmares about the big one (EARTHQUAKE)that is going to happen? Is it going to happen tomorrow, next week, next year, 10 years from now----damned if I know and I don't think Mother Nature has closely confided in a human being. I have taken some precautionary measures but I am not going to be scared out of my wits and not enjoy my daily. normal living. And. I do sleep well at night. The devastation in China is gut-wretching and Mother Nature can be very cruel, especially so when Man has turned his back on Her.
Betty

LQL

If you are currently living in California, there is no reason to worry or lose any sleep since the best you can do is to be prepared for a natural disaster, subsequent shortages, and limited government support. Imagine New Orleans just a lot bigger. Our leaders will be watching Spamalot or singing Bomb Bomb Iran while sending in Mercs to disarm and finish off the survivors, while they seek refuge in their remote Ranches in the Rocky Mountains or South America with the hope the locals don't get them first as the social order breaks down.

Also there is this false hope that the disaster in China is deflationary for oil, lol, maybe for about a month before a massive rebuilding effort takes place unlike New Orleans.

OC

Just a little info regarding the Sino-Japanese talks:

'Inside China and Japan: The “Warm Spring” Summit'

http://www.stevequayle.com/News.alert/08_Unrest/080512.warm.spring.html

' No American President, on one of his occasional visits to Japan, has ever been met by Japan’s Emperor more than once. On a repeat visit, he has often not had a second meeting. China’s President Hu gets three meetings with the Emperor of Japan. No Japanese or for that matter Chinese will fail to see the historic symbolic importance of this for both nations. In effect, in seeing China’s President Hu three
times during his five-day official visit to Japan, Emperor Akihito has elevated President Hu to an equal.

No leader of any Asian nation will fail to see the true geo-political importance of this summit between Japan and China. The diplomatic rush to make new arrangements with Japan and China is already on. This can be seen in Indonesia’s announcement that it is considering leaving OPEC! There will be much more of this. The rest of Southeast Asia knows that were Japan and China now to act in parallel or in any joint action, few if any of these nations would have the economic, diplomatic or political power to withstand the pressures. Taiwan is already on the move, offering closer ties with China. North Korea has again refused further talks with the US - but made it clear that it will still talk to China.'

calvino

Mike, you miss the most salient point. We have gotten free stuff from Japan for twenty five years, and from China for ten years. They take IOU's in fictional money, meaning Treasury notes backed by the full faith of people like Hanky Panky at the Treasury, the Bearded Clam at the Fed and Heckuva job Brownie and the Decider in Chief himself. Dredge a septic tank and you will get collateral of about equal value. This was done in exchange for us dismantling our manufacturing capacity and Sam Walton funding the Clinton library. Go Bubba.

Elaine, I take exception with you designation of these pirates. None of them holds his life in his hands like a pirate would have, prepared for the hoosegow, the sword or the gallows at any time. These are chickenhawks who expect others to fight for them. Two members of Congress have children in serving in the military - they have no stake or concern with the future here. They are sure that they are better than the rest of the proles here and above risking themselves for anything.

hardrock

Elaine, In your comments regarding the money paid to the Fed as interest on money created out of thin air for the purchase of Treasury bonds, I have been told that the Fed returns most of their earnings back to the US Treasury. I read somewhere that even though they are a private corporation they are not allowed to make 'excess' profits. I find this hard to reconcile if they are in fact buying, or as some say monetizing Treasury bonds. The Fed cannot earn interest on phantom money.....or can they? I hear so many versions of how the Fed makes the bankers and their owners rich through interest payments. How does it really work?...does anyone really know for sure who is not on the 'inside'?

andrei

Speculators Did It!

http://www.mises.org/story/2347

'When all other explanations are exhausted, modern governments usually fall back on the speculator, who is held responsible for all economic and social evils. What the witch was to medieval man, what the capitalist is to socialists and communists, the speculator is to most politicians and statesmen: the embodiment of evil. He is said to be imbued with ruthless and fickle selfishness that is capable of wrecking the national economy, government plans, and, in the case of German inflation, the national currency. No matter how blatantly contradictory this explanation may be, it is most popular with government authorities in search of a convenient explanation for the failure of their own policies.

The same German officials who denied the very existence of inflation lamented the depreciation caused by speculators, or they blamed the Allied reparation burdens and simultaneously denounced speculators for the depreciation.'

Elaine Meinel Supkis

Speculators are like vultures: they go for the dead bodies. The bodies died usually due to other causes. Just as flies don't kill, they flock to death scenes.

Currency and interest rate speculators don't cause events, they feed off of the events being caused by the central bankers and the various governments.

The Treasury has no treasure, the Federal Reserves has the tiniest reserve of any major industrial nation, much less, the supposed #1.

Once people think about that, they can understand how Funny Money™ is without any real foundation and this is why our system is suffering such dislocations vis a vis the rest of the planet. Free trade has sealed the fate of our non-Treasury/non-Federal Reserve system. Everyone in the know knows it is fake.

And I have a terrible sneezing cold right now! It is nearly impossible to read due to watery eyes or type due to sneezing. It is a plot against me, I say! Yeah! :(

Anthony

according to wiki, Dubya reactivate 2 fleet. we now has 6 active fleets (including the just announced 4th)

I wonder how much all that will costs.

http://en.wikipedia.org/wiki/Seventh_Fleet

Elaine Meinel Supkis

Yes, I just wrote about that about half an hour ago, Anthony. Thanks for noting it anyway! Amazing. We are expanding our empire as it goes bankrupt. Just like Spain, Rome or Britain. Not to mention the French and German empires...

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