The War on the Middle Class by the New Aristocracy

He’s been called the “rock-star economist”, French Economist Thomas Piketty’s “Capital in the 21st Century is a bona fide bestseller and have provided fodder for Progressives, the present scourge that will soon spell the death of our society. I was still under the impression that Global Warming, Climate Change, or perhaps Climate Disruption, as it has been recommended to be called now, was going to be the End of our Civilization but we have been misled; it is income inequality as Mr. Piketty’s thesis asserts that will do that.

Keynesian Progressive Economist, part-time lecturer for City University of New York and regular contributor to the New York Times Paul Krugman, has boasted that Piketty’s thesis has reduced those on the Right to name calling after failing to mount any substantive counterattack. If by name calling Mr. Krugman refers to people who have called the thesis a work of Marxism, then I guess he is correct. Of course, that is not all they are saying, in fact the book’s conclusions are being shredded by other economists and not just in the US but some of his contemporaries in Europe as well, we will get to that in a minute.

Piketty’s book is meticulously researched, he covers economic data from several countries for over 200 years and he has a flair for writing making his case. What is Piketty’s assertion? In essence his conclusion is that Karl Marx and communism were right, only that he was too early. His theory is that capitalism is a powerful force that eventually concentrates wealth of select few and widens the inequality gap. He arrives at this conclusion by noting that the growth of wealth (returns on capital) are outpacing economic growth (returns on labor). With the wealthy owning more of the capital the inequality between both will continue to grow uncontrollably.

For instance for the US, he uses IRS data from tax returns to illustrate his point. This becomes one of the many issues that plague his overall thesis. As Scott Winship of Forbes magazine;

“…omits any consideration of the welfare state — Social Security, Medicaid, Medicare, food stamps, public housing, school lunches, etc. Piketty’s analysis also excludes the value of health insurance that Americans typically earn as part of their compensation package. It hardly makes sense to measure poverty without including the payments that are being made to reduce it. Incorporating such factors, Winship estimated that the real median income of a four-person American household in the bottom 90 percent of earners rose by $26,000 between 1979 and 2012, or $13,000 for a one-person household, as against Piketty’s claim of minus $3,000 per household in that period.”

Rather telling that an advocate for redistributionist state ignores the very measures that the government uses to reduce the inequalities between the have and the have-nots. That is just one of the 6 ways that Forbes found that Piketty’s book is not holding up. Another and perhaps more important one the claim by Piketty that the wealthy can grow their capital by 4% doing nothing at all and just holding on to their capital.

As Kevin Williamson of the National Review points out;

“A huge pool of potential capital is widely available to the non-rich. If the growth of capital left to build upon itself is such an amazing unstoppable force, says Kevin Williamson in National Review, that’s an argument for turning Social Security into an individualized investment account like a 401(k). The Social Security withholding tax amounts to 12.4 percent of each paycheck (divided equally between employee and employer). If that money were put into individual accounts growing at a modest rate instead of providing a giant government slush fund to be used for general spending, every American with a paycheck would retire a successful capitalist. This principle holds true regardless of income. Even if you made only $20,000 a year and never got a raise, writes Williamson, investing $2,000 a year at 4.5 percent for 45 years leaves you with over $300,000, which could be converted into an annuity paying $1,800 a month, more than you made in your job.”

You can read the whole article, it list 6 ways the book is not holding up Forbes here:

Piketty’s book seems like an attack on the wealthy, how is that an attack on the Middle Class?

While hidden as an attack on the rich, the whole thesis is an attack on Capital, everything from real estate to financial assets to intellectual property. His recommendations of a Global Wealth tax or confiscatory wealth tax on the rich of 80% on earnings and inheritance are design to make capital disappear or be greatly diminished. His claim that these taxes will not affect overall growth are belied by historical data that show otherwise.

He uses the new Chinese oligarchy of Mega rich businessman as an example but completely ignores the millions of Chinese who have been lifted from abject poverty along with them. There is a reason why Communist China is now Capitalist Lite China now. Yes some have become obscenely rich, to Piketty, but there are many millions more who have also benefitted from a market economy.

In Europe, and especially France from where Mr. Piketty hails from and Socialism dominates most governments, yet not one has adopted communism and the full Marxist theories. The question is why, the answer is the large Middle Class that resulted from the neo-Capitalist societies there. As long as that large Middle Class exist, Marxism will remain as a fringe philosophy, tried and failing.

Piketty likes to note the large salaries given to top executives and claims such large salaries are not warranted, by their performance. He contrast that to the earnings at the bottom and sees this as untenable. His solution is to tax those earnings at a prohibitive rate even though he admits that this will do nothing to help the one at the bottom of the pay scale, while at the same time asserting that it would not affect growth and the prosperity which is what will ultimately keep lifting those at the bottom.

Confiscatory inheritance taxes means that your heirs will not enjoy the fruits of your labor, thus denying them a chance that they would continue to build on your assets. How many have heard of heirs that had to sell their parents’ home, or cash out other forms of capital to pay for inheritance taxes? This only ensures that raising their wealth, they have to start again accumulating wealth and are not allowed to enjoy the benefits of the previous generation.

The rich will find ways to ensure that their Capital is not confiscated in that manner, but how about the rest of us? What incentive is there for us to attempt to achieve, if we know that the government will take it back in the end?

The new Aristocracy

Piketty, Krugman and many others are the new “aristocracy”, highly credentialed individuals that share the same views and now largely in control of large portions society. They are the movers and shakers, although largely unseen they influence our Society in various ways. As they control the Media, they ensure that their Progressive views are the dominant one. They control most Universities campuses and stamp down any dissent, while punishing those that do not toe the Progressive line.

Much like in Great Britain during Victorian times many of the noble aristocrats found themselves penniless but titled them parlayed that into positions within government, industry the arts selling their noble titles to add a sense of respectability and gain some modicum of wealth in the process. Today we have these highly credentialed aristocrats who use their degrees to dictate and lend credibility to all sorts of schemes whose ultimate goal is to take from those that produce and redistribute it to themselves, first, and to others.

This is how we get the whole AGW mess, a massive burden that will ultimately only make everyone poorer, except those Aristocrats that will illuminate our way through the diminished or confiscated growth of everyone. This were we get schemes like Obamacare, another boondoggle that only serves as a massive tax on the Middle Class as more companies abandon Employer subsidized health care for a much less affordable and diminished product. The NPR recently ran this story “Employers May Start Paying You to Buy Health Insurance” trying to paint this in positive light, after years of denying that this would be a consequences of Obamacare. Ironic, now they tell us.

This is perhaps the most puerile form of diplomacy that I have witness is born. The #Bringbackourgirls hashtag diplomacy is so revoltingly asinine and useless that it brings tears to my eyes. The hashtag diplomacy was previously used during the Crimea annexation to force, convince beg the Russians not to take over in Crimea and divide the Ukraine. We know how effective that was.

In this case we are not talking about a country like Russia but about an Islamic terrorist group whose aim to wipe out Western education and influence in the country. While Nigeria’s cell phone coverage is vast and reaches even the most remote sections, do we really expect this group to see the First Lady of the United States or the PM of the UK with a placard saying #Bringbackourgirls and make a difference in their thinking or their actions? I’d suspect that are scheming on ways to further capitalize on our plight.

These are the same people who have vigorously maintained a campaign to portray the Tea Party group as racism, xenophobic, ignorant and of course White. This while at the same time claiming that although Boko Haram the group who had killed hundreds before they abducted the young over 250 girls in Nigeria was not an Islamic terrorist group.

Even now weeks after the abduction, there some in the State Department that are still denying the connection between Islam and Boko Haram or their previous atrocities. In their view, Nigeria was not tolerant enough and brought upon themselves for trying and failing to stop a group who sole purpose is to turn Nigeria into an Islamic Sharia State.

The New York Time who has become the voice and lead apologist for these enlightened aristocrats has declared that we do not have the ability to mount a rescue operation, gee you think. From the story;

The administration quickly offered its help to President Goodluck Jonathan of Nigeria in taking on the kidnappers, the extremist group Boko Haram. But the United States has not sent troops, and is unlikely to do so, in part because the girls are not believed to still be in one place, and because of the risks in attempting such a large-scale rescue over a vast expanse.

The story continues to blame the Nigerians for Boko Haram’s actions;

The problem, they said, rested more with Nigerian officials who ignored past American warnings to soften brutal tactics that only fueled Boko Haram’s insurgency.

If all we are going to do is pretend to help, what is with the hashtag diplomacy? It provides a safe, inexpensive and impotent way to pretend to care about events we are neither prepare or capable of attempting to correct. This is especially true in this case as the Administration fought for years to name Boko Haram a terrorist organization despite all their atrocities in the past.

Yes this new Aristocracy is very tolerant until they aren’t. The Boko Haram insurgency was tolerable, like Muslim Brotherhood in Egypt or the Al Qaeda insurgency in Benghazi Libya, they were are considered tolerable and worthy of our support. Yet, they have all ended up badly. The Maidan insurgency in Ukraine was also worthy, but not those in the Crimea or Donetsk or current protest in Venezuela something our Aristocrats media controllers have all but ignored.

Stephen B. Waters wrote in his book Individuals, Journalism, and Society

“Generations forget themselves and go stupid over time. Hubris grows. ‘Hey! I’m the center of my Universe and I must be right!’ Literature is called to refocus the magnifying glass of consciousness to remind humanity that the lessons of history are there for their benefit and, if forgotten, will bite them in the ass”

Mr. Piketty is fond of the French Revolution who he considers more significant because it appropriated more wealth. I hope he does not forget what happened to Aristocrats (both the educated and the nobility) that supported that revolution. Hopefully, he won’t lose his head thinking about it.

 

 

 

 

 

 

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25 Comments

    • Thanks Jordan, we are doing well. I hope you are doing well, as well.

      I agree the subject seems very complex, unless you remember the end game. Where is this leading too, what is the goal?

      If you keep that in mind, you will see that confiscation of Capital (wealth) is goal. Talk of inequality is just another way to try confiscate capital, all capital from everyone. Remember that in communism there is no personal capital, everything is communal.

      • I am a Keynesian…. sort of …. when I studied for my Economics degree we did study Keynesian theory.

        My contention is that the likes of Krugman and Piketty are not Keynesians. They are not even neo-Keynesians. They are in fact Marxists.

        John Maynard Keynes did not attack Capitalism or Capitalists and he was in fact a Capitalist… please take the time to consider that statement.

        To date I have not found my copy of the Keynes book that I read when I was at university. I am still trying to learn more about Keynesian theory.

        What I do know is that Keynes wrote a theory. Like any real scientist (economics is apparently a science), Keynes was willing to have his theory tested, and if there was an error, he was willing to accept correction. This is why Keynes had a friendship with Hayek. Keynes actually agreed with some of what Hayek was saying.

        Keynes wrote his theory based upon his own observations about the times in which he lived. He offered a prescription for getting out of a Great Depression. He was able to see, for example, that the way in which Germany was treated after the First World War had a devastating effect upon the world economy.

        Keynesian theory worked up until the 1960s, and after that time it has been a bit of a flop. I would have thought that this should have been obvious to most “economists”. The issue at the time of the late 1960s to the early 1980s was stagflation.

        Besides learning a little bit about stagflation during my degree, I have found that economists, especially Marxist economists steer clear of the subject. I am positing that they refuse to touch the subject because it shines a light on the role of labour in the workforce, and the impact of unionization upon a given economy. You will never read about Krugman dealing with the role of labour and unions. On the other hand Keynes did in fact write about the role of labour… it is just that he got it wrong in the end.

        From what you have written, I would have to agree that Piketty is wrong in his conclusions.

        The economists who see everything through the Marxist prism inevitably get it wrong because what they do not see, or understand is that unionists, especially the union leaders are Capitalists and that these same leaders see themselves as the elite.

        I do not understand the U.S. economy. I am at home with issues relating to the Australian economy. What I see is that there are people who have an entrepreneurial spirit and they do very well for themselves, especially when they make a decision to save money, and to become investors.

        Whilst Keynes got some things wrong, he did make a serious contribution to our understanding of economics. The same cannot be said about economists such as Krugman. There are other American economists, such as Samuelson who were also very influential in developing economic theory. What I was taught still holds up today because these were the basics.

        The likes of Krugman and Piketty fail in what they write because they do not look at the whole scenario. Keynesisan theory ultimately failed because there is an inate desire to be monopolistic or to form oligarchies. Keynes was writing about perfect competition, and such a situation can never exist because of so many other facts. Ultimately, in the future, when cooler heads prevail, the same will said about the theories ( lack of original theory) of Krugman are closely examined.

        We cannot survive if we continue down the path to being a full welfare state. Someone must pay when government attempts to redistribute our income.

  1. Aussie,
    Thanks for your comment. I am glad you mention Keynes and his theory. Part of the problem with the Keynesian theory is that it has never been applied as he prescribed it.

    Keynes sought to replace the economic output during a downturn with government spending. This part many neo-Keynesian get right, but he also wanted to lower taxes at the same to spur the recovery. This is where everyone seems to get it wrong, as many countries not only increase the spending but also increase the taxes or the regulatory barriers to new investment and private capital expenditures.

    Here in the US for instance, after the last financial collapse, our government spent over $868 billion in a stimulus package during President Obama’s first few months. At the same time the Administration has set upon raising regulatory barriers and taxes on businesses, especially those in the Energy sector (coal, gas, oil, etc.)

    To complicate matters the Federal Reserve which technically adopted the first of the many QE (quantitive easing) which has acted as a sort of hidden tax on the population, as the printing of ever more dollars, devalue the dollar and its purchasing power and raises prices for everyone.

    At the same time through budgetary gimmickry that one-time stimulus that was passed become the new baseline for our National Budget. As such it meant that the $868 billion was spent year after year for 4 straight years, until the new budget was agreed upon earlier this year.

    You are right about the Labor unions as they deprive companies of an asset that companies need to deal with downturns, controlling labor costs. In many instances this is the only area of control that companies have, as material costs are out of their hand, and so is demand for their product or services.

    • Bori, that is a BIG YES!!

      I think that your comment is very much to the point, that his theory was never applied as he prescribed it… except during the 2nd World War in Great Britain.

      There is evidence in Australia that Keynesian theory was applied in the correct way. The 1950s and 60s was a period of expansions and contractions… or credit squeeze if you prefer. However, if Government departed from the norm, then there was disaster!!

      I still believe what is critical to the failure of Keynesian theory, perhaps in the Australian context happens to be issues that relate directly to OPEC and the fact that OPEC is an oligopoly. Keynesian theory was all about perfect competition, and OPEC or rather the oil market is based upon an oligopoly where the suppliers rather than the buyers determine the price. The late 1960s brought about the first oil shock. This was followed by several crises including the Iranian crisis and the demise of the Shah of Iran. Coupled with the oil shocks, and again this is Australian context, we had a change of government direction from conservative to the looney Marxist left-wing ALP with front man Gough Whitlam. Talk about expenditure overload!! Since the ALP was in charge, and inflation had increased, this in turn led to the unions demanding higher and higher wages, and causing all sorts of havoc by going on strike… all the time… yes I lived through that period and it really was that bad… or it seemed that way!!

      A stimulus as was advocated by the Marxist economists was never going to work. It is certainly not what I believe that Keynes would have advocated. Even long-term unemployment benefits is not exactly what Keynes advocated. Keep in mind that he had that as a policy prescription during the Great Depression when thousands upon thousands were out of work.

      At the time of the GFC Australia was not in a bad position financially, but the KRUDD government seized the opportunity to do a lot of stupid things. Some of the stupid things that were done led to the deaths of some young people who were employed to install insulation batts. KRUDD stole that idea from Barry. There was a lot of pork-barrelling, and the worst rip off would have been the schools building revolution, where money was wasted on small building projects. The issue here is that the amount of money that was wasted, especially on projects where the costs was about double what it needed to be to build the structure in the first place. Another consideration is that this style of project did nothing for infrastructure projects that had been waiting to be completed… More wastage of money with the cheques sent to low income people allegedly as a return of taxes that they had not paid in the first place… the people who paid the taxes in the first place missed out. The money was spent on goods that had been imported from overseas!! In other words there was no real stimulus for local domestic production!!

      I think you would be familiar with the same kind of criticism for the US porkulus that was never in fact even a budget. The money was wasted and frittered away.

      Australia went from about a $10 billion budget surplus to a $40 billion deficit during the life of the KRUDD/Gillard/KRUDD government. That performance is abysmal.

  2. No discussion about economics could be complete without at least a brief study of the Austrian School of Economics. I have a BA degree in Finance and Economics and studied Keynesian economics, but unfortunately, I knew nothing about the Ludwig von Mises Institute until well after I graduated in 1971.

    I first heard about the Austrian School of Economics from Ron Paul, who I followed throughout his career so if you have never paid serious attention, or want a refresher, I invite everyone to do so.

    Home page is here:

    http://mises.org/

    What is Austrian Economics? (brief explanation)

    http://mises.org/etexts/austrian.asp

    ================================================
    I doubt that most people have any idea what money really is, where it comes from nor do they know a thing about money and banking or our Federal Reserve System.

    “What Has Government Done To Our Money?” is probably the best and most concise explanation I have ever seen and, boy, do I wish every American would read it. If everyone read and understood this, the Fed would “go out of business” tomorrow.

    This is a review of it from Ron Paul’s Economics Reading List
    ==============================

    Murry Rothbard’s short text is a three-part book that explains first, what money is; second, how governments have meddled with it; and third, the history of the breakdown of money.

    Money is introduced as coming naturally from exchange.

    Clearly Robinson Crusoe had no need for money. He could not have eaten gold coins. Neither would Crusoe and Friday, perhaps exchanging fish for lumber, need to bother about money.

    Initially people traded with barter, but this is hampered by finding people willing to exchange at the right time. Eventually someone will realise they can trade their own goods for something more desirable to the person owning what they want, and complete a trade by indirect exchange. Over time, some goods become more useful than others for indirect exchange, and eventually one a society will settle on one or two most exchangeable goods as money. People “buy” money when they exchange their goods for money, and “sell” their money when they exchange it for goods. Rothbard’s explanation of this and a few other related ideas is piercingly clear and concise.

    The story of how Governments have meddled with money is equally intriguing and shocking (even if you are not new to the story). Rothbard starts with the nature of governments:

    Governments, in contrast to all other organisations, do not obtain their revenue as payment for their services. … In a barter economy, government officials can only expropriate resources in one way: by seizing goods in kind. In a monetary economy, they will find it easier to seize monetary assets, and then use the money to acquire goods and services for the government. Taxation, however, is often unpopular. … The emergence of money, while a boon to the human race, also opened a more subtle route for governmental expropriation of resources … counterfeiting.

    We now imagine that an economy has 10,000 gold coins, and that a counterfeiter can introduce 2,000 more, undetected. The early holders of this new money will be at an advantage: they can buy goods at the old prices. But this spending bids prices up, and people last to receive the new money will find that prices have been going up long before their income. “Whenever the newly issued money is used as loans to business, inflation causes the dread ‘business cycle’”. (This asymmetry of the effects of inflation is also discussed in Economics in One Lesson and Economics for Real People.)

    Initially, governments monopolised the minting process, taking the right to produce coins from the previously free economy. Governments chose the denominations, not the people, and they named them so as to disassociate them from the underlying weight of metal: marks, francs, dollars etc, instead of grams or grains. This paved the way for debasement. The Saracens of Spain had a coin, the dinar, the which in the mid-twelfth century contained 65 gold grains. The Christian kings conquered Spain, and by the early thirteenth century the coin, now called the maravedi, had only 14 grains. Soon it was too light to circulate, and was replaced by a coin containing 26 silver grains. This was in turn debased, and by the mid-fifteenth century contained only 1.5 silver grains, again too small to circulate.

    Governments learnt another trick: legal tender. By defining what money could be, rather than leaving it open to the market, governments gave themselves the power to define the poorest form of money as legal tender. For example, worn coins can be defined as good as new ones. The real power of this came with the introduction of paper money, when the metal backing each unit of currency could be gradually decreased. People redeeming gold still threatened the extent of this inflation, because banks that over-printed paper money would eventually lose their gold as suspicious depositors withdrew it. This inconvenience was resolved with central banking. Giving a false confidence in the backing of the banking system and centralising (co-ordinating) control of the money supply allows the banking system to almost inflate at will.

    What Has Government Done To Our Money? is the shortest of the economics books in this list. It’s focused more on money that general economics, but the stories it tells should encourage you to pick up some of the longer ones if you want more details. If you think you may have an interest in the broader economic issues but want a short taster, this is a good place to start. If you’re relatively new to concepts such as fractional reserve banking (the current situation, where the banking system is inherently insolvent) and fiat currency (as opposed to a free money market), this book is an essential read. I especially recommend it if you’re angered by the constant banking bailouts: the act debasing our money by turning on the printing press and throwing the inflated supply at what Hazlitt shows is inevitably the least efficient businesses.

    ======================
    Here is Ron Paul’s recommended Economics Reading List:

    http://aviewfromafar.net/an-economics-reading-list-by-ron-paul

    ===============================
    I hope this post is not of line, bori, and thought it may add to the significant points you are making.

    You said: “………….you will see that confiscation of Capital (wealth) is goal.”

    http://www.forbes.com/sites/billfrezza/2013/10/15/the-international-monetary-fund-lays-the-groundwork-for-global-wealth-confiscation/

    ==========================
    For the record, I have become totally discouraged and simply needed to drop out, so to speak. Why? Our government has probably gone much too far to be fixed, and no one is attempting to do anything about it anyway. Instead, they are hell bent on worsening our situation and we cannot stop it….even with the vote. The vote has become impotent. Both parties are really much the same except for the new kids on the block, meaning The Tea Party folks, but the old school establishment guys are never going to concede.

    If Boehner is reelected Speaker of the House and McConnell keeps his seat, The Constitutional Republic is gone. It can only be restored in the same manner it was first formed.

    http://www.aoiusa.org/blog/the-republic-if-finished-and-the-america-we-knew-is-gone/

    Many similar articles can be found with simple searches.

    Study hard.. test tomorrow.. lol

      • I disagree with regard to Central Banking. It is the Australian Reserve Bank, our Central Bank, that has helped to keep Australia financially sound.

        Perhaps it is the way that the whole is approached. Perhaps it is the charter of the Reserve Bank that has been the reason for its success. Perhaps it is the professionalism of the Board of Reserve Bank Governors.

        In Australia the Reserve Bank determines the interest rate. Each month the board meets and studies the economic data. If the economy has overheated they take corrective action. For the past 12 months or more the interest rates have barely moved, and this is due to the economic conditions. (I do not necessarily agree with all of their decisions).

        What I do know is that the Reserve Bank does in fact apply Keynesian theory in the proper way, and it works.

        On the other hand, the Australian Government Budget is a very different kettle of fish. The profligate previous government was a total economic disaster. Their spending was out of control, but what is worse is that a lot of things have been hidden from sight. The expenditure on the NBN network (fiber optic cable) to the home is a gross waste of money. Many issues can be raised including whether or not government should have been involved in the first place… in other words why not let private enterprise raise the funds in the first place. With new technology and increasing internet speeds there has not been a valid reason for government involvement.

        This, I think is critical in how all the theories, other than Marxist theory come together.

    • Jordan try looking at the same information in the light of the fact that Krugman is a Marxist. It is the Marxists in charge and they have a certain agenda. It is no wonder that you feel discouraged.

      With regard to Ron Paul though, I am simply not a fan of what he has to say. It is feelings, not facts involved, I simply do not like the man.

      • Aussie:

        Google central banking in the U.S. Then the Federal Reserve Board if you are interested. There is no way to debate the two of them here. Suffice it to say, they have virtually destroyed our financial/economic system.

        Our Founding Fathers foresaw their evil ways. Insofar as Ron Paul, he understands economics and finance better than anyone on the planet. He is a strict Constitutionalist like me.

        I know nothing really about your financial system so I cannot speak to it. If it works for you and everyone else, that’s all that matters.

      • One thing about Ron is you either hate or love him. I was taking a night class in Money and Banking while stationed at a New Mexico air base,..Monazano.. It was taught by a Major John McVey who introduced me to Ron Paul, central banking and the FED all at the same time. I feel gifted to have thought all along with similar minds. Paul is a fascinating figure in that

      • As with many other agencies of great power, where there good done there are some that do the opposite. Our Federal Reserve has done the opposite. It has tried for years by deflating our currency to prop up the failures of the administration and it is prolonging what will ultimately will be a painful correction. It has done that at the expense of the Middle Class who have not recovered from the previous correction due to the Housing bubble.

        I am glad to hear that your Central banking systems is working for your country and helping it. I wish the same could be said about ours.

  3. Bori, I think that you have both got the essence of what is wrong. The system works in Australia because of the tighter controls and we have a much smaller economy.

    The system is not working correctly in the USA because the Marxists have gained control.

    I still believe that the answer as to why it does not work in the USA goes back to the same period when we hit STAGFLATION. Look at all of the changes that were made, and at the shocks to our respective economies since that time.

    Another way of expressing this is that this was also the period when protection of industries via import duties, was removed. It was the start of the dumping of product by the Asian markets into both the USA and Australia.

    Since the 1980s we had all of the same reforms, especially in banking, that the USA had and not all of the reforms have worked out. The rise of the Chinese steelmakers ended Australia’s steel industry. Most of our textiles industries shifted to Asia (China, Indonesia, India, Malaysia, Bangladesh, etc. etc.). We have suffered a subsequent reduction in the quality of goods available on the domestic market. Then there is the rise in the cost of lamb and beef because it seems that selling on the world market is more important than feeding the domestic market. We are suffering from the same coal industry issues meaning that mines are closing and etc. etc. complete with the fringe types who protest at anything.

    The difference that I see between our respective countries is perception. I personally have no trouble with the concept of having a central bank. I have no trouble with the idea of having a national currency rather than currency for each State. A Central Bank should be able to control such things. HOWEVER…. in the USA the real damage to your economy was done by Timothy Geithner. It did not begin with Geithner, but it began during the Clinton Administration era, and perhaps one needs another look at the policies of President Reagan to process what might have gone wrong at the time. This is how I get back to that period of STAGFLATION. The oil shocks that the world experienced, as well as a number of other events at the same time had a world-wide impact. It was how our respective countries then dealt with the STAGFLATION that is the key here. One of the changes that affected all of us was the discontinuation of the Gold Standard. We all moved to using x-currencies, and in particular we took the US currency as a standard. I do not really think that this is as big an issue that some make it to be, because I think that perhaps there are other factors to consider.

    What we need to analyze more thoroughly happens to be what were the factors that led to the GFC in the first place. The US Federal Reserve deserve much of the blame, but so does Clinton and Obama, in particular I blame Obama because he is the one who lobbied for the changes that allowed people who could not afford to pay for a mortgage to end up getting a mortgage when they did not have the means to make the monthly repayments. It was bound to end badly. I blame Geithner for the issues relating to the junk bonds and the flooding of the world with excess US dollars. However, I think that I am barely scratching the surface when it comes to working out exactly what went wrong, unless I then mention one more name… Krugman.

    • I think the differences also are also more fundamental. Your country has a largely homogeneous population that loves their country.

      Our country has devolved into little factions all fighting for their own little fiefdoms. Our political class only seems to care about appealing to those factions at the expense of the country.

      While there are some that see our Diversity as a strength, there are oblivious to the deficits of having different factions all seeking a larger piece of the American pie.

      Our economic policies always take those division in consideration which ends up with terrible or half measures that end up doing more harm than good.

      • When Krugman speaks to the political side, he is not sticking to his knitting in economics. The man is not a political economist. The work for which he received the Nobel prize had nothing to do with the economy as a whole, or for that matter it had nothing to do with the Greenies wet dream of Climate Change. Krugman is clueless on a number of issues. He is a shrill individual when he is promoting his Marxism. He lacks the finesse that I had seen in the works of John Maynard Keynes. Since I have not read Hayek and Von Mises I cannot comment upon their contributions, but I can comment on a number of other individuals who contributed in various ways including Paul Samuelson and his contemporaries.

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