Today’s Must Read
Stirling Paulson has an excellent article up on Open Left. The very basis of our economic system is broken and must be changed.
The key to this is not spending or “stimulus” since that will only convince people to go back to doing the things that created the problem. This is how the occurred: at every crisis point the powers in charge felt the problem was that the people who had created the problem needed confidence to keep doing the wrong things. In the time of the Great Depression it was feared that bankers with gold would not lend. Now it was feared that bankers sitting on top of mortgages would not lend. In both cases the real problem was that there was not enough of the old kind of money on the planet to pay back all the debts that had been denominated in that old debt.
The solution is not to create “confidence” in any form, but to change itself, and change the nature of the political economy that maintains that money. This is not a crisis of a particular aspect of the current system, but of the very objectives of that system.
[snip]
The ultimate failure was the idea of using a and on the wealthy to bail out the economy after the dot com crash, and the economic policy of a war in Iraq as the way of producing value. The war failed to create the stream of cheap oil, the housing bubble has burst, and the dollar devaluation used to pay for both created oil driven inflation.
This means that there was no good policy: allow the dollar to decline, and oil would hit 200 dollars a barrel. Squeeze off the loose money, which is what was done, created an implosion in housing. This is not about “sub prime” mortgages, but instead about the huge piling on of unregulated leverage.
But what was that leverage designed to do?
It was meant to replace government.
That’s a pretty good summary of the ideal. Replace government with unrestrained capitalism except in matters of defense (where unrestrained capitalists gorge at the trough as well.) Read the whole article it’s worth it.
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