Keeping the Weeds out of the Grass. Not the Feds Job

Hope you saw Brancachio and Moyers last night on Health Care. Some really good stuff. I really like T R Reid. who wrote "The healing of Ameica" "It doesn't matter whether it is government or private. What matters is that a nation decides it is going to agree to take care of all it citizens. The rest is easy. Whether it is Japan with 3,000 private insurance companies or the UK with a substantially government run program. Nothing will happen until the nation agrees that is where they want to go. We haven't reached that point yet." In hindsight, I think Obama might have been wiser to have this dialogue first. I think he would have gotten agreement on this, easily. Then should have come the discussion about how to do it. But, I did say hindsight.

Well, on to your radio show.

www.kpfa.org/archive/show/34


Ok. listened to your radio show. Frankly, I have only listened to videos, never radio before...have to look around and see what else is out there. Back to Hudson. Thought provoking. I need some time to digest his economic thoughts.

I totally support and agree with Hudsons underlying premise. One of the commentors wrote it best..."People just don't realize that our economy is run for the benefit of a tiny, privileged minority," Although, I prefer an analogy to HG Wells' "The Time Machine" where the Eloi are left to wander freely in a land of plenty and the Morlocks come out every night to harvest them for food.

But, even more interesting to think about.......Hudson and I both agree on his basic premise. But, Hudson uses a fuzzy circular illogical and factually vapid argument, that I totally disagree with, to reach the exact same underlying conclusion as I do. I am just as sure we would differ on the solution. Irreconcilable differences with somebody I actually agree with. Is one of us crazy? Fascinating.

I refer you to Mom's splurge (weed) problem in the back lawn . It is clear the splurge is gobbling up all the soil formerly occupied by the grass....no room for doubt there. Hudson would attribute it to a coordinated conspiracy by the splurge. I say the grass and splurge are just doing what is in their nature...the problem is lax oversight by the gardener (politicians) poorly supervised by the owner (you and I, citizen...well, OK Mom). Of course, the real problem is that Mom doesn't water the grass enough ....but, that totally messes up the analogy

Examples...

Hudson keeps talking about $13 trillion in bail outs when the entire national debt is only $9 trillion. TARP was only $700 Billion . Where does $13 trillion in bail outs come from. (Only??? I must be crazy....Vietnam only cost $50 Billion a year) Wish he had either taken it upon himself to support that number or the interviewer had called him on it, instead of mooning over his greatness.

As to Bernanke. Does the man not understand that Bernanke has absolutely no power over Wall street or policy? This oversight is the responsibility of Secty of Treasury, DOJ and Congress.....Bernanke has only 3 functions that I am aware of..

1. Oversee FDIC insured institutions to insure they are in compliance with the law he didn't write and can't change. Take them over and sell or close them if they are not.
   
2. Control the supply of money in the economy through setting overnight borrowing rates, issuing of currency and all the confusing computer/paper money used in TARP (The sole target of these is to keep inflation within acceptable boundaries..which is why Volcker had to raise interest so high to prevent inflation after the government spent so much in Vietnam ...think I have my history and timing correct here). The money supply faucet is the central control over economic growth. Growth of more than 4-6% annually is optimum to provide jobs for a growing population. Sustained growth of 8-10% for a period of 7 - 10 years will result in inflation growing faster than economic growth, referred to as the economy heating up and eventually a collapse in proportion to how far the two got out of balance, as happened in Asia in the 90's. Too little growth means not enough jobs are provided for the growing number of workers. Incidentally, this money supply lever, in the hands of a politically independent Fed, is what your pal Friedman got his Nobel Prize for thinking through, and also got paid for teaching to governments. Not all the mumbo jumbo stuff he preached on the side. Friedman did this after the political/oligarch rats chewed their way around Thorsten Veblens Controls. Steiglitz got his Nobel for a pointing out how the rats are chewing through Friedmans controls.
   
3. The Fed, and all 12 of its geographic subsidiaries generate forests of economic and money supply data and provide and interpretation of it.
   

Oversight of Wall Street is not within Bernankes power except in instances where FDIC funds are involved. However, I will read more on this as maybe I have it wrong....a lot of people are saying the same thing, which doesn't necessarlily make it correct. Mark Twain was wrong. Just because there is smoke does not mean there is a smoke machine behind it. It may only be a liberal or a Republican. "Pay no attention to the man behind the curtain"

Hudsons read on Latvia and Iceland were total baloney and actually not even close to factual (at least the Iceland version) two economically failed states because they put too much of their money in the fancy mortgage stuff. Now the IMF, the Devil of Last Resort , comes in and gets the blame for saying "I'll loan you money to get you out of this mess, but you have to show me how you can pay it back because it's not really my money and the guys I borrow from are already bitching and may not loan me any more because they got problems of their own and then there won't be any money for the next fool who pisses away all his cash without thinking it through, so ya gotta either raise income or cut costs, buddy..Fairs got nuttin to do wit it. Dis is bidness"

Hudsons entire discussion was full of nonsense like the above, but we reach the same underlying conclusion. Curious. Maybe it is the backgrounds. Hudsons academic and resume credentials are in order. They are excellent. But, I guess it is perfectly logical to assume a guy with an undergraduate degree in Philosophy, a PHD in economics and who was the Harvard Peabody research fellow in Babylonian economics would see things differently than me who is, well, me.

Have to read and think more about this. Thanks for the reference.

BUT,

The big problem is that, as Hudson says (although incorrectly placing blame on the Fed), and the following articles indicate and I agree....our leaders are going to do absolutely nothing about cutting back the companies Too Big To Fail or regulating the circumstances..It just isn't going to happen and that is a a whole different book. Oh, they'll pass some laws and play a few fiddle songs, but nothing with teeth.

The other big problem is that the politicians seem hell-bent with this Fed audit bill (the Fed is already audited enough...No secrets there) which is really an attempt to take over control of the money supply. We're really going to be in a pickle (what exactly does that mean anyway?) when the politicians control the money supply. This way, lies the Vortex.

The following current articles are on the same subject and, in my opinion, a little more based in reality .

Status of TARP investments

http://www.newsweek.com/id/214096?from=rss

Doubts about Bernanke

http://www.newsweek.com/id/214132?from=rss

Krugman ..Debt may actually be a good thing.

http://economistsview.typepad.com/economistsview/2006/02/paul_krugman_de.html

Also, the following might be entertaining, in a cute kind of way.

Comments of the Moment

“ Let's get fiscal, fiscal,
I wanna get fiscal, let's get into fiscal.
Let me hear your budget talk,
Your budget talk, let me hear your budget talk.”

“ Hopefully, the attempt to restore 1953 America will not turn into an attempt to impose 1933 Germany.”

“ If ignorance is bliss, why are these people so angry?”

“ Simply put, take some of the profit-motive out of healthcare and one ends up with a better and more affordable healthcare system, as numerous Western industrialized nations have discovered and benefited from for years.”

“ Somewhere in this great nation of ours, Bill O'Reilly's math teachers are sobbing.”

“ In the free market of ideas everyone has a price.”

“ I am a descendant of holocaust survivors and as such I am often disgusted by casual comparisons of everyday things to the holocaust. At the same time ... when things truly do resemble the situations that led to the holocaust they should be pointed out. ”