They Killed the Goose that Laid the Golden Eggs

They Killed the Goose that Laid the Golden Eggs. What’s more, they are beating her dead body with the political certainty that she will wake up and produce more. The depression is real. They have repealed all of the regulations written after the last depression, rules to prevent the depression from ever happening again. You heard the political sound bites of deregulation and privatization.

The golden goose needed a game warden. You can’t play a money sport without referees and rules. The same goes for banking, insurance and investment houses. This is not political, just reality. It has to do with trade, wars and mostly money. War profits the Daddy Warbucks’. Outsourcing jobs and manufacturing, works for large corporations. The trade deficit lines the pockets of the whole investment and banking world. Foreign dollars come back to us for a safer haven than banks in our `uneven trading partners` own country. All of the feed for our goose went to its greedy owners. You can’t drive an economy without people – productive people. Our people are in trouble: schools, drugs, culture, healthcare, obesity, forty-five years of cold war, and now the second great depression.

Don’t be fooled. This depression’s real alright. The numbers show it, but our leaders spin and deflect responsibility -- on the one hand by cooking the numbers and on the other by creating a political storm over the national debt. The national debt is a big problem, but it is not the primary cause of the depression. We are not recovering because there is no liquidity. There is plenty of money as measured by a stable M2 money supply. However, much of the wealth of America, the wealth that drove the economy, the wealth of optimism now resides with the super wealthy the political and the banking class. Largely wealth from the trade deficit, it does not circulate and does not raise the standard of living. Furthermore, the multiple in the GDP shrank with unemployment and fear of unemployment. Tax revenue gains greatly from the multiple. The more times money changes hands in a year the more it adds to tax revenue. Divide the GDP by the M2 and you have an approximation of the multiple.

In the past with a booming economy, I have argued that lowering taxes raises the tax revenue because of further spendable income and a larger than normal multiple. With a shrinking multiple, however, tax revenue declines. Either of two choices, the government can spend less, or it raises taxes. One kind of spending, though, benefits the military industrial complex and the other benefits the people. Your make the choice. Additionally, one tax scheme spares the wealthy relatively speaking and hurts those who are struggling; the other taxes the Banking class who benefited most from the trade imbalance.

Moreover, how do we gain back jobs lost to outsourcing? How do we encourage local manufacturing and export? How do we impose rules that prevent a money aristocracy in America? Think about it. What do you suppose your own political representatives will do for their own tax bracket and for their wealthy contributors?

Ivory tower economists argue free trade will eventually raise the standard of living. Whose, I wonder. I am just a back street economist with a little agrarian economics, so my thoughts won’t count. I do know, however, that Ross Perot had a point. “You can hear a giant sucking sound.” It’s the sound of politicians beating a dead goose.