GDP Deflator at a Five Decades Low While Income Inequality Is at Record Highs
by ilene - May 4th, 2010 3:29 am
GDP Deflator at a Five Decades Low While Income Inequality Is at Record Highs
Courtesy of JESSE’S CAFÉ AMÉRICAIN
From this chart sent out this morning by David Rosenberg, we can see that the GDP deflator is at a five decades low.
I tend to believe that the modifications to the inflation measures, including the deflator, that have accumulated by the federal bureaucracy over the past ten years are greatly understating the actual inflation in the economy.
There are very positive benefits for the government to do this. The lower the deflator, the better and higher the real GDP figures will appear. And a low measure of official inflation reduces increases in payments in Social Security and other programs with Cost of Living Adjustments (COLA), including official debt payments on the bonds and the TIPS.
Gold gives the lie to this, which is why it is so hated by financial engineers and statists.
On the other hand, the inequality of income distribution in the US is at level not seen since the 1920′s.
There is some good reason to think that government tax and fiscal policies, as well as the monopolistic makeup and subsidized growth of the Banking sector facilitates this wealth transfer and concentration, which has a highly negative impact on real economic growth.
There will be a change, and the trends will be reversed. How they are reversed and what changes will accompany those reversals are very much open to debate, and divergent historical examples. But these changes almost invariably involve a shift from individualism to statism.
"Those who make peaceful revolution impossible make violent revolution inevitable."
John F. Kennedy
Change will come if the system remains as unsustainable as it is now. And what gives me a somewhat pessimistic view is that people never seem to learn the lessons of history.
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Iceland Voters Reject Bank Bailouts in Crushing Electoral Defeat; Neo-Liberalism In Context
by ilene - March 8th, 2010 4:30 pm
Iceland Voters Reject Bank Bailouts in Crushing Electoral Defeat; Neo-Liberalism In Context
Courtesy of JESSE’S CAFÉ AMÉRICAIN
"Voters rejected the bill because ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, are being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers."
"Is there any reason why the American people should be taxed to guarantee the debts of banks, any more than they should be taxed to guarantee the debts of other institutions, including merchants, the industries, and the mills of the country?" Senator Carter Glass (D-Va), author of the Banking Act of 1933 and of Glass-Steagall
It is interesting that the government of Iceland had already declared the vote of the people as ‘obsolete.’ One has to wonder when the voters will declare their current government and their representatives as obsolete. One would give the government credit for at least allowing a vote on a referendum, but to then disregard and circumvent it through political devices is seems like a base hypocrisy.
Iceland is a victim of the neo-liberal economic deregulation of the 1990′s, in which a few bankers can buy the government, and rack up enormous profits for themselves in Ponzi like leverage, and then attempt to socialize the debt back to the people when their schemes collapse.
Neo-Liberalism is a system of economic thought embracing the efficient markets hypothesis, the inherent good of deregulation and the natural impediment of government regulation, the necessity of free trade and globalization, the supremacy of the corporation over the individual person in the social economy, and supply side economics. It most likely favors a one world currency and consolidation of production into large corporate combinations or ‘trusts’ under the principle of laissez-faire.
Neo-liberalism may degenerate into crony capitalism, or even corporatism, as its theoretical idealism of perfect rationalism and virtue falters against the reality of human behaviour. In times of financial crisis, for example, neo-liberalism ironically turns to centralized economic planning by allegedly private banks which appropriate public funds and the power of the monetary license to socialize private debts, and, in a strikingly Orwellian twist, eviscerate the discipline of the markets and the individual to preserve their freedom, and the well being of the private corporations. Although now largely repudiated, neo-liberalism has strong roots in the public consciousness, and its adherents hold considerable power in Western governments and among the…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site