Austerity Must Go

U.S Austerity Must Go!

Among cuts to Social Security, etc., Trump's latest budget proposed there was a $17.6 million cut to federal aid to Special Olympics. This budget follows the debt reduction “cut spending” policy called “Austerity.” It's a policy started in response to the Crash of 2008. That crash was caused by private, for profit banks. Millions of workers lost wages, homes, etc. Counter cyclical government support for the banks included enormous Federal Reserve purchases of bad assets. Total Fed. support for banks was somewhere from $7 trillion to $29 trillion. The system of Treasury and Fed. was designed to allow this concealment and the media cooperated.

Austerity grew into policies intended to reduce the national debt by keeping the interest rate negative (below the rate of inflation.) Savers would be purchasing power losers. Regulations would make banks hold the lowest paying government bonds. Taxes were made more regressive. Wages dropped and pensions were cut. Neither savers nor bankers nor workers like this, so the government designers gave it a “castor oil-ish” name: “Financial Repression.”

Financial Repression seemed to make sense. Republicans had complained that the national debt was too high. They added that the Democrat stimuli spending was increasing the debt too much. If you personally overspent it would be best for you to cut expenses, wouldn't it? This set of policies is supposed, by reducing the debt, to restore business confidence and growth. The Republican Study Committee and House Republican Freedom caucus squarely endorsed deficit reduction. But this repression is based on faulty analogies, fallacies of composition and capacity. An individual or family is different from a whole nation and nation can create it's own money. The U.S. can create money, spend it appropriately, and control any inflation through taxes. America's the richest, most powerful large country the world has ever seen. America is so much richer than any other large country that trying to cut $17.6 million out of the appropriation for Special Olympics is like the manager of a posh Trump hotel stocking the penthouse bathrooms with the cheapest 1 – ply toilet paper he can buy.

Austerity spread from the U.S. with assistance of global institutions like the World Bank, International Monetary Fund, European Central Bank, etc, through at least 125 countries, from advanced industrial ones through lowest income ones. But there are severe problems with Financial Repression! After 9 years, deficits have not gone down, but increased. Growth is slower than desired. Inflation also is lower than the standard 2% target (see Ch. 9 Sovereign Debt, presented at the IMF conference on Sept. 13-14 2018.) Since this klusterkludge of policies does not work, some rationales had to be developed to excuse continued infliction, particularly of austerity. In the U.S. “Austrians,” I call them ( Republicans) have made sexism, racism, and nativism primary excuse – explanations for it. Austerity in America, in combination with the personality of President Trump, has severely aggravated social divisions.

Inflation has between low for the whole decade, despite the $7 - $29 trillion “Keynesian” stimuli. The U.S. dollar is the word's indispensable reserve currency. Most important, our Constitution gives Congress the power to create more money. These are essential points of Modern Monetary Theory. MMT implies that we can create enough money to have un-threatened entitlements and welfare programs as we think right. Those are reasons austerity is inappropriately cheap and must go! Houses divided against themselves can, indeed, stand – but much less happily than when there is less conflict among their inhabitants.

This election of 2020 is truly critical for America's character and independence. Cleansing America of Trump values should be the paramount goal of any opposition party. But many voters still prefer to be ruled by tall, white, male Christians. So Democrats need discipline to put aside temporarily, identity politics. 2020 is not the best time to try for another “minority” President. Obama did what he could, but was critically limited. Only one financier was jailed for illegality in the Great Crash. (If Obama had insisted on more, any one of thousands of red blooded American “patriot” assassins might have murdered him. So Democrats should this time choose a presentable white male Christian American, to stick up for real American values such as truthfulness, honesty, justice, courage, and active charity, civility and patience. Overconfidence this time is extremely dangerous.

Republicans have the guts of burglars while Democrats shrink back and waste every crisis. Expect some sort of October surprise. A desperate Trump will have resources: a 22,000 employee Trump Organization, Internet coward trolls, maybe Russian agents, and maybe NRA - funded open carry gun enthusiasts clinging to AR-15's. What if they are marshaled to the polls and there aren't cops who stop intimidation? I don't advocate carrying guns myself. “Nice” liberals don't use guns. But don't go alone. Have eye protection. Don't respond to verbal provocations. Have a person or two with a camera, cell phone and media numbers stand at a safe distance ready to take pictures. Is anyone building up Anti fa? Southern Florida news papers have recently covered a helicopter borne Navy Seal extraction drill to evacuate an “ambassador” from danger at Mar-a-Lao. Be forewarned.