The View From 1776
A scholarly authority on central banking questions the Fed’s performance.
- We have to remember that we are a nation deep in debt. Inflation means we pay back debt with dollars of less value. We also have to remember that at this time, they are trying to hide a huge problem with financial institutions and even while trying to hide them, may see 100 or more fail. They are also hoping the "inflate" the housing market to get consumer's feeling good enough about their home value to start spending again. They are afraid the consumer will start saving.
In fact a recent poll shows the majority plan on using the "rebate" to save or pay down debt, not spend it. Fear of losing your job causes people to start saving to pay bills in case they do lose their job. There are a lot of people in Washington right now who are so afraid that the consumer is going to stop spending that inflation is the least of their fears.
However, as we saw in the 70's it should be a fear. Recessions are how a society corrects excesses. When they are avoided or delayed, the problem grows. But, the problem can be delayed and grow for decades. The sad thing is that eventually, it can't be avoided any longer and it will happen. If not now, then in a few years. Probably less than five at the rate things are coming to a head.Posted by JanPBurr on 02/29 at 11:50 AM
General Motors Corp. says it anticipates more U.S. plant closings and plans to offer buyouts to its entire domestic work force.
Rick Wagoner, the chief operating officer, said in Detroit Thursday the moves are necessary to bring the No 1 automaker's production in line with declining demand for new cars and trucks in its home market.
About 46,000 of GM's 72,000 blue-collar workers will be eligible for a buyout, expected in April, Wagoner said.
This is what I mean. We can be laying people off, seeing 8 million homes valued at less than loan value, see 2 million in foreclosure, see 1.5 million real estate agents making next to nothing, see states lose $917 million in property tax revenues and huge loses in sales tax from many store (make it up in sales tax on gasoline for some) and see huge budget deficits in state after state and not have a "technical depression."
That is not Bush's fault. That is the fault of decades of Congress and various administrations in both parties playing games to make things look better than they are.Posted by JanPBurr on 02/29 at 01:09 PM