Phiscal Pouting

[digitaldiscipline]

That, friends and neighbors, is what a market-wide temper tantrum looks like when someone says, "You need to get a real job, because I'm not going to give you this allowance forever."

The Fed's policy of quantitative easing has been, essentially, a years-long, trillion-dollar annual allowance being given to the financial and business sectors of the US economy ($85bn/mo), and when Papa Bernanke simply suggested that, you know, they start producing something[1] from all this fucking money, they freaked the fuck out.

600 points (4%) off the DJIA from peak to trough, just because "I'm going to cut your allowance if and when you get a raise at work... but only if and when."

You fucking selfish, cowardly, sacks of shit. You just fucking admitted that trickle-down economics are a lie, and you're content, nay, eager to suckle at the trillion-dollar teat until you fucking burst without letting any of that money out of our greedy little hands and out into the real world, where real people need it to make their real situations better.

Allow me a moment to draw a parallel.

The same people who say that any kind of welfare or subsidized healthcare breeds dependence on the part of the poor are the ones throwing these fiscal temper tantrums when the suggestion that, if the economy's circumstances improve[2], there will be less assistance given to the marketplace. Let that lack of self-awareness, crass selfishness, and lack of empathy marinate a while. Projecting their own selfishness onto others, much?

Personally, I don't see anything wrong with the Fed's statement, except perhaps that it should, like the military's terms of force deployment, have a specific draw-down date. "You assholes have eighteen months, after which, we're closing the spigot to the tune of $7bn/month, so in two and a half years, you're on your own. And don't think that sabotaging the economy to prolong this largesse is going to fly. There are plenty of people who still think you fuckers need to go up against the wall for 2007's antics, and they're probably right."

(I wanted to do this yesterday, but work blew the fuck up to the tune of our second-busiest day/week ever, so I had eleven hours of hell to cope with, and had just enough in the tank to come home, make a small dinner, and go the fuck to sleep. I will probably repost a pointer to this on Monday so that it gets a few more eyeballs.)

[1] A decrease in the rate of unemployment and a slight uptick in the rate of inflation[2]
[2] My macroeconomics are rusty, but I'm not sold on the idea that inflation should outpace GDP; those of you with greater familiarity with the subject are invited to clue me up on this argument, from as many perspectives as you've got

Comments

[the_axel]

On the whole, inflation is bad for rich people which is why the neo-cons pushed so hard to make it a dirty word that must be kept below 5%.
So, most likely it's too low now to be in the best interests of the working class.

Very high inflation (30%+) is bad for everyone. I don't know what the sweet spot is.

[etcet.livejournal.com]

I can't imagine how inflation would be good for poor people, either - those with fewer dollars to spend seem like they'd get *more* fucked by increasing prices....?

[the_axel]

There's a couple of things:
First - debt. Typically poor people are more dependent on debt, and high interest debt. Inflation devalues the debt so their debt as a percentage of income drops faster. The same applies to government debt, and poor people depend more on government services.

Secondly, the Philips curve shows that in industrialized nations there is an inverse correlation between inflation and unemployment.
So if government has policies in place to keep inflation low then unemployment remains high.
High unemployment put more strength on the side of the employer in wage bargaining so with low inflation, the poor get poorer & the rich get richer.

[etcet.livejournal.com]

Assuming that income keeps pace with inflation, I can see how your first point is viable; however, for those on a fixed income, the decreasing relative value of each of those dollars seems problematic?

For instance, let's say Social Security or Company X provide 3% cost of living adjustment increases, to account for inflation. If inflation is at 10%, that's simply going to make people lose ground more slowly if there is no change in policy or recalibration of wages or whatever).

Your lattermost point kind of loops back to my central point - the quantitative easing *isn't* driving up inflation as one would expect, it's simply going into the coffers of large financial institutions and their investors, and (because it is going to suck when I get to say "I told you motherfuckers so") there will almost certainly have to be a bursting of this bubble as well, though, at least in recent history, the only bubbles that burst have fucked over the poor or middle class people, and the bubbles for the rich and/or powerful seem inconveniently/unfairly/suspiciously durable.

[the_axel]

It's true that when we're talking about a group as broad as 'poor', not all members are going to be affected in the same way.

For people on fixed incomes, the core piece is to ensure that the COLA calculation is properly tied to inflation rather than arbitrary.
If it is, then they should be fine.
If it isn't, then the problem isn't so much with inflation but with how the contract was written.

I agree with your central point. I just wanted to explain why inflation is not a bad thing for the working class.

[etcet.livejournal.com]

Much obliged. :-)