What the Fed Has Done to the Working Man
Posted on April 18th, 2009
by Daniel McCarthy |
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At every crisis, the Fed stepped on the gas inflating the economy. Unions benefited as wages rose along with the price of everything. However, eventually there comes a time when no one is willing to pay those wages. That has obviously happened. Yet because or the Fed’s expansionary policy, prices of houses and goods and services continued to rise, outstripping wages.
The only people who really benefited from the Fed’s expansionary policies were the bank executives, the fat cats on Wall Street, and government bodies who taxed rising property values and took a chunk out of everything people made via sales taxes, income taxes, and property taxes.
Even during the boom years, one of the dirty secrets of the economy was that middle and lower-class wages were not keeping up with inflation. If families weren’t feeling pain commensurate to the degrading economic position, it was because they kept their cash flows up by going heavily into debt with credit card and mortgages. Now that the bubble has burst, many Americans are finding out just how impoverished they really are. But what has to be kept in mind, always, is that this impoverishment is not a function of the burst, it’s a product of the original bubble, which inflated housing prices into the stratosphere and induced Americans to live by debt. The only alternative to a painful correction would be inflating a bigger bubble for a longer time, and that’s just what Obama and Bernanke want to do. But any re-inflation will ultimately burst, and the bigger the bubble, the more wrenching the return to reality will be.
Filed under: Economics
Hear, hear! This is so key: the boom, not the bust, is the evil that must be prevented in the future. That really can mean only one thing: abolition of the Fed and restoration of the “people’s money” via the free market: gold.
Sorry to do this to you… I think I agree with every word you just said. EXCELLENT POST.
Just after World War II, the children of the GREATEST GENERATION in the 50’s wanted to engineer a better life for their families and their country. Everybody works, if you don’t want your family poor and starving.
THEIR CHILDREN, in the 60’s wanted to “socially engineer” a new and inclusive society, expanding the SAFETY NET to cover the bottom 10% of the nation’s wage earners. (We marched to help Ceasar Chavez get the minimum wage for mexican migrant workers on US farms).
We have watched a steady growth of the soft and dependent “complainer” class since, built largely on the 70’s notion that NO AMERICAN CHILD should ever be hungry or undereducated.
The only fallacy I see, Daniel McCarthy, is the expectation that there is some “norm” that we will automatically return to.
But the crushing debt, ignited by the BUSH ADMINISTRATION (with a major push by a Democratically-controlled Congress), and multiplied by the socialist-agenda driven Obama, will change the equation.
As our youth lose their scientific and engineering capabilities, and lose their morality and workethic, and adopt a dependency/entitlement lifestyle, you will begin to read in the IEEE (International Engineering Magazine) how ALL the good development is taking place overseas.
Next time you buy a computer, or a cel phone, analyze where each hardware and software component originated.
I have been reading the IEEE magazine since the 70’s. In the 90’s, I helped Microsoft train technicians to answer the telephone for technical support. We made it look SO EASY, they decided they could ship the whole thing to India.
Now I gotta go listen to Glen Beck, and Rush Limbaugh, to hear some of my thoughts echoed back to me (or if you’re a LIB, you can pretend they’re telling me what to think).