Future of American economics

There is an interesting thing happening right now in the United States. We literally are a people divided between this group or that group. Labels are flying around like birds on a clear day; liberals, conservatives, moderates, far-right, far-left, etc. This hasn’t developed overnight, rather, it’s been building for decades as the grand plan of the neoclassical economists played out through multiple administrations starting in the 1960’s. Regardless of the starting point in my processing of our current state of affairs, I inevitably keep coming back to the economy and the growing wealth gap between the lower/middle class and the upper class (using only three for my own sanity). Wealth is the base of the pyramid, what makes all the closed-door deals possible. It’s the nuclear engine powering the government machine built on top.

There are three central assumptions of neoclassical economics (1):

  1. People have rational preferences between outcomes that can be identified and associated with values.
  2. Individuals maximize utility and firms maximize profits.
  3. People act independently on the basis of full and relevant information.

My own theory as to why the neoclassical model is not working has multiple points of thought. The most egregious theory is that the individual has been removed from the equation all together and firms have managed to “game the system” to their own benefit. The individual (non-wealthy) is left to piece together the scraps of what is allowed to trickle down from the top, which lately, has been decreasing significantly. An individual is unable to act in independently due to the fact the media is not providing unbiased relevant information or, if they do, it isn’t the full story. For example, the NYT has already apologized for their biased reporting of Donald Trump to the American people during this past election, however, less than a day after posting it, they removed the line “We believe we reported on both candidates fairly during the presidential campaign.”(2) Interesting retraction.

The founding of country, and well into the late 1800’s, our country ran on something that was closer to classical economics (3).

Classical economists observe that markets generally regulate themselves, when free of coercion. Adam Smith referred to this as a metaphorical “invisible hand,” which refers to the notion that private incentives are aligned with society welfare maximization under certain competitive conditions. Smith warned repeatedly of the dangers of monopoly, and stressed the importance of competition.

Within the last century, following the Great Depression, a new model emerged that was referred to as Keynesian economics (4). This model was argued to be a possible solution to the Great Depression to stimulate the country with two approaches:

  1. Reduction in interest rates (monetary policy).
  2. Government investment in infrastructure (fiscal policy).

The Federal Reserve was the answer to the first point above and was created after the stock market crash in 1907 where a run on the banks almost collapsed the economy. In regards to the second point above, multiple projects were started in the 1930’s that included bridges, roads and public buildings that were created by the government for the benefit of all Americans. These projects were all funded and coordinated through the Works Progress Administration (5) and ran through to 1943, at which time the United States became involved with World War II. It is interesting to note that it was far from a perfect system.

By the end of the Second World War, Keynesianism was the most popular school of economic theory in the non-Communist world. Beginning in the late 1960s, a new classical macroeconomics movement arose, critical of Keynesian assumptions, and seemed, especially in the 1970s, to explain certain phenomena (e.g. the co-existence of high unemployment and high inflation, or “stagflation”) better. It was characterized by explicit and rigorous adherence to micro foundations, as well as use of increasingly sophisticated mathematical modelling. However, by the late 1980s, certain failures of the new classical models, both theoretical and empirical hastened the emergence of New Keynesian economics, a school which sought to unite the most realistic aspects of Keynesian and neo-classical assumptions and place them on more rigorous theoretical foundation than ever before. Interpretations of Keynes have emphasized his stress on the international coordination of Keynesian policies, the need for international economic institutions, and the ways in which economic forces could lead to war or could promote peace.

What we’re left with at this point is a warped version of economics that has parts of classical, neoclassical and Keynesian economic systems. The last sentence of the above quote is very telling of the system the country has put into place (largely by the wealthy elite). They’ve selected using economic forces that led us straight into war (8 countries at last count) that has multiple mechanisms in place to ensure that the wealth generating machine pumps out as much money as possible. Create war, destroy things, rebuild things, repeat. At all steps, the wealthy elite make sure they get their payday.

The question still remains as to what President-elect Donald Trump is going to do for the next four years. His current filling of key administration positions with establishment insiders is certainly not a good sign.

Sources:

  1. https://en.wikipedia.org/wiki/Neoclassical_economics
  2. http://nypost.com/2016/11/15/new-york-times-edits-its-election-apology-letter/
  3. https://en.wikipedia.org/wiki/Classical_economics
  4. https://en.wikipedia.org/wiki/Keynesian_economics
  5. https://en.wikipedia.org/wiki/Works_Progress_Administration

Neoclassical economics are killing our Democracy

Corporate America is stealing our future one dollar at a time.  They have brainwashed us into believing that a neoclassical system they’ve put in place is the one that will create prosperity as they achieve wealth and power.  The players of this neoclassical system are corporations, banks, politicians, and the wealthy elite.  Their’s is a systems of Socialism, but we don’t see that because we’re driving the wheels of their machine through a Capitalist market.  Essentially, the capitalist non-elite are supporting the socialist elite.  I’ve been reading and watching a lot about this lately due in part to our ridiculous Presidential election coming up and also because I’m tired of being a pawn in their game of becoming ever richer.

Our elite have convinced us that the only way to be happy is to acquire debt that purchases the goods and services produced largely in other countries.  Debt, as I’ve come to realize, is basically a modern form of slavery.  We are slaves to the corporations, holding the majority of wealth in the country, that take what they want even when we don’t have it.  The 2008 housing bubble crisis proves this point to me in the form of thousands of foreclosures around the country.  The people who couldn’t afford predatory lending practices paid the price, they lost their home.  The banks and mortgage companies, left with sub-prime defaulted mortgages, got bailed out by the government.  They created over $8 trillion of new debt, created money out of nothing, to keep the companies that had become so pervasive in our economy that we couldn’t let them fail.  What if we had?  Where would we be?  Our country wouldn’t have died.  We would still be here, perhaps even with a reformed and more equal system.

Here’s a scary statistic.  All paper currency in the world right now is 97% debt.  The appearance that our world economy, in my opinion, is on the brink of collapse that even the elite won’t be able to stop.  Sure, they’re fine now, stroking the palms of politicians at the ratio of 5 lobbyists to 1 politician.  Over the last 50 years, the system has been rigged and contorted with massive deregulation, repeal of the Glass-Steagall Act, created conflicts around the world.  All this has resulted in a system where only a wealthy few, contributing very little, have ridden the backs of billions of people making sure they can never climb out of poverty.

The Presidential elects have shown concern on the realization that the middle-class is disappearing.  That is the truth, the middle-class is shrinking.  They are borrowing more and more money as they’re buying into the lies of the elite corporations that sell them their mortgages, cars, and “stuff” that we are all brainwashed into thinking that we need.  I’m starting to think that middle-class is being systematically dismantled because they are the biggest threat to the wealthy elite running corporations, media, and government.  The middle-class, still with the ability to become aware of the truth and open their eyes to the system that has been allowed to continue, are a huge threat to the socialist system at the top of the heap.  I’m starting to question everything now.  I’m starting to actually research this and verify what I’m being told.  I’m shocked to find that verifiable facts are emerging through multiple sources that are confirming what my research is uncovering.

I am so frustrated at myself for having fallen into the propaganda without actually seeing the real motive behind all of this.  The arrogance the top corporate and political leaders have had for the last several decades.  It seriously pisses me off!  My concern isn’t for me, but for my daughter.  What is she going to inherit if this system is allowed to continue unchecked and unregulated?  What is she going to have to suffer with, or rather, without, as she gets older?  Will I be able to help her with college?  Will she be in a position where poverty is the only choice she has no matter how hard she works?  I’M ANGRY AT THE SYSTEM!

The military actions we’ve been involved with in the last 15 years since 9/11 are only proving to me that we have spread our parasitic system around the world.  We decimate a country hunting for possible terrorists.  We arrange for a huge loan from a world bank and then offer to rebuild their country.  That money that should have gone to the citizens left in that country instead go to U.S. based contractors that build infrastructure that the poorest people can’t access.  What good are highways without a car to drive on them?  What good is electricity grids if you don’t have a house to have it delivered to let alone pay for it to be delivered?  Instead, the poor people who don’t have a voice have to lose their farms because we’re now drilling for oil or stripping for resources.  These people have to endure pollution in the rivers they’ve come to depend on since being pushed off their farms.  How the hell is a humanitarian mission going to help a poor citizen if all the money from the loan is spent on the minority elite that can afford to use it?  WTF?

I’m sure by now you’re asking yourself what can we do.  I can’t tell you anything other than just do some research, listen and read with an open mind, and decide if who you’re voting for truly has your back of their own.  This year’s Presidential election isn’t about Trump vs. Clinton, it’s certainly not about male vs. female, it damn well isn’t about rhetoric that helps get them voted in to result in 4 years of excuses how the Senate and House are polarized against their platforms.  What it’s about is very simple I think, it’s about who is the best choice to go against the system.  Simply put, in my mind, neither candidate, including third-party, would ever go against the system.  Third party might have a chance, if they won, but the system is so much more than what one person can fix.  The President certainly isn’t the fix.

What fixes the system; reboots the economy; makes serious change, is us.  The non-elite people who are being broken under the weight of a socialist elitist system that has been created right under our noses.  We fix it by paying down our debt and getting rid of it, can’t be a slave to the system if you don’t owe it anything.  We fix it by working to educate others around us to start looking with wider eyes and actually seeing it for the corrupt bully that it has become.  We fix it by rising up and demanding that it be fixed through our elected officials, as we the people, have the power to remove them from office and put someone in that will listen to us.  We fix it by going back to the economists that helped create the system that worked and was backed by a gold standard.  We fix it by creating an open and honest discussion that isn’t partisan, racial, mean, or accusatory.

What would happen if all credit and housing debt in this country were forgiven, with a moratorium on any new credit, and a concerted effort to make sure anyone without the means could access the money they needed to start over?  The non-elites would benefit the most as they would suddenly own their home and everything that had been purchased on credit.  The system would start to self-correct with each subsequent paycheck.  The elite would bear the brunt of this forgiveness, including the government, as they control more debt than all the non-elite combined but don’t have any assets they could own afterwards.  Wouldn’t that be something?  It’s been done before; Germany 1947, following WWII.  It’s not such a fantastical idea, and how can 99% of the country not be right against the remaining 1%.  It starts with us and its up to us how it ends.