Anarcissie, October 8 at 10:14 pm #

It’s not spending that causes inflation.  It’s creating money which is not convertible from or to labor or commodity value, as when we run the printing press.  There is the exception of credit—if you believe a dollar will be worth something in the not too distant future, then you will value it; but the U.S. is running out of credit because it has been creating funny credit money through absurdly low interest rates for many years.
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Anarcissie, I have to commend you.  While you are still, as always, wrong, at least you are wrong in the right direction.  Multiple actions by the Federal government HAVE contributed to the crisis, but excessive printing of un-backed money isn’t one of them.  Our inflation, which is actually SURPRISINGLY low, has been driven by other factors:

1) The US Govt’s deficit borrowing that began in the summer of 2001 when George Bush, seeing a HUGE bolus of public money (in this case the surplus) sought to give it to his friends as he had done before, recklessly and regardless of the damage.

2) The rocket-like rise in oil prices that, though it fell again, didn’t fall as far and has been quietly rising.

3) The rapid exiting of foreign investors from the dollar due to the over-extension of borrowing by both the government and businesses and consumers.

Inflation has been held down by the rather disastrous effects of:
1) Unemployment at 10% (real unemployment in excess of 15%)  People got less to spend…I know, I was unemployed for nearly 5 months this spring and summer.
2) The credit crunch—money to borrow dried up like a summer rain in Death Valley.  People aren’t spending.
3) The collapse of the housing market.  Nothing can offset oil price upward pressure like the nationwide catastrophe in home buying and home building.

I suggest you look at 3 things:
1) the case study of how venture capitalist Thomas H. Lee of Boston raped and destroyed the incredibly sound company of Simmons Mattresses as documented in the NY Times this last week.  He’s Gordon Gecko 10 times over.

2) The case of Reader’s Digest, which has gone into bankruptcy under similar circumstances.  For decades, the Reader’s Digest was a license to print money, whatever you may think of its policies.  Under the Wallaces (yes, DeWitt and Lila Acheson Wallace of charity fame) the paternalist corporation chugged on, making money and giving “Digesters” (as employees were known) safe and solid pensions.

3) Today’s article, also in the Times, on the poisoning of ten’s of thousands of homes with tainted Chinese sheetrock.

You have in these the essence of what has gone wrong in America, under the mistaken label of “capitalism” when it is no such thing.

Cain is Able:
’... Further spending will only increase inflation ....’

It’s not spending that causes inflation.  It’s creating money which is not convertible from or to labor or commodity value, as when we run the printing press.  There is the exception of credit—if you believe a dollar will be worth something in the not too distant future, then you will value it; but the U.S. is running out of credit because it has been creating funny credit money through absurdly low interest rates for many years.

I believe tat Ms. Coco has shown us the limit of her reckoning. In one paragraph she contradicts herself in consecutive sentences.

“The $700 billion infusion of taxpayer cash into financial institutions probably averted a global banking collapse. But it has done nothing to keep millions of Americans from losing their jobs, their homes, their fading belief that hard work and commitment can somehow insulate them from facing the worst.”

So she is either naive or insincere.  If the original TARP bill prevent a global banking crisis how did it not benefit us all?  It surely benefited some more than others, but if banks such as Citi and Goldman had gone under what is currently happening would seem like heaven. 

Further spending will only increase inflation that is already showing the treasury who ultimately is in charge.  If spending your way out of a crisis worked the richest country in the world would be Zimbabwe.

’... But the aftermath was supposed to answer the justifiable anger of the citizenry with a tough regulatory regimen. ...’

Among the community of politicians and columnists, maybe.  The people were justly infuriated and made no such deal.  They went to the polls, threw out the bad guys, and elected a radically different sort of person who was supposed to bring hope and change.  He didn’t.  Now, something else is waiting to happen, waiting for its moment.

And we should be surprised?  People talk about upholding the constitution and yet our government and corporations trample it every day.  After Bush/Cheney, we no longer have a constitution nor any real rights left.  Pretty soon we will be no better than the serfs of old Russia ... property of the real czars of Wall Street to be used and abused as they see fit.  Welcome to the new Soviet republic of America!