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It is time to define our terms and stop living in Clinton's land of "is" where everything depended on what your definition of "is", is.
Federal Reserve Chairman Ben Bernanke actually revealed the core of our economic crisis. During the last stimulus package hearings , he told Congress that the best way to stimulate the economy was to have Americans buy "domestically produced goods". Of course this was an impossible task since so much of our production was moved out of the USA. The extra stimulus money that was spent at the retail level, quickly went to where the products are made outside the USA when shopping at places like Walmart. The money did not stay here to grow a local value added economy. ( See http://www.bizarrepolitics.com/ben-says-buy-usa and note too a review of Alan Greenspan's book, The Age of Turbulence at http://www.bizarrepolitics.com/greenspan-dancing-in-the-dark noting that Greenspan did not even have the term - Free Enterprise- in the index of his book.
With the financial crisis, we found that our economy was primarily based on making money on money instead of making things. We found that a massive new working poor class replaced a middle class. Hurricane Katrina also exposed a vast underclass living in a silent depression not only in New Orleans but across the country too.
In our economy based on making money on money in a global economic arena, we needed many money products to add value to the intangible value of printed paper money. In doing this we actually went through a deflation process. The value of workers and labor was deflated. This represented not only a valuable tangible asset acting as a money standard but with the devaluation of this asset , the money products were affected too. Worst yet, with consumerism supporting so called Free Trade and the global economy, the new working poor class and the underclass in the USA found it more and more difficult to afford even the cheaper imports at places like Walmart.
Still Obama and other political leaders do not talk about the Trade Deficit that has broken records for years. Free traders like to discount the Trade Deficit as being a factor in our economic crisis but when anyone starts buying more than what they are selling, Free Trade starts looking like a ponzi scheme.
The only thing that will work, relating to what Federal Reserve Chairman Ben Bernanke said, is to bring back local value added economies that won World War 2 and restored economies in Europe and Asia by duplicating success and not by chopping up the golden goose that laid the goldent eggs and sending the pieces across the globe. We now know that the economies based on making money on money instead of making and growing things are burning out.
A good example of what we can do now is to simulate the Lend Lease Act before and after our entry into World War 2. The world was out of money when war was breaking out in Europe and Asia. President Roosevelt said he was not going to let the dollar sign get in his way from supporting the allies and created mass values by ramping up the most awesome industrial might and agricultural power the world has ever know. It also proved you can not do business with people who do not have money. You first have to find a way to add value in their economic efforts to do business with them. Otherwise , you use impoverished workers who can not afford to buy the things they make or have anything left over to buy anything you may have left to sell. See http://ezinearticles.com/?id=390710 for Lend Lease article.
Workers and labor won World War 2. The military would be nothing without them. Now more than fifty years later, we are losing that war. See Lend Lease Act was real Free Trade and not chop liver as in the Globalist Free Trade World.
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MC Shalom P. Hamou Prof. Benjamin Shalom Bernanke Exposed "The debate about the ultimate causes of the prolonged Japanese slump has been heated. There are questions, for example, about whether the Japanese economic model, constrained as it is by the inherent conservatism of a society that places so much value on consensus, is well-equippedto deal with the increasing pace of technological, social, and economic change we see in the world today. The problems of the Japanese banking system, for example, can be interpreted as arising in part from the collision of a traditional, relationship-based financial system with the forces of globalization, deregulation, and technological innovation (Hoshi and Kashyap, forthcoming). Indeed, it seems fairly safe to say that, in the long run, Japan’s economic success will depend largely on whether the country can achieve a structural transformation that increases its economic flexibility and openness to change, without sacrificing its traditional strengths. In the short-to-medium run, however, macroeconomic policy has played, and will continue to play, a major role in Japan’s macroeconomic (mis) fortunes. My focus in this essay will be on monetary policy in particular. Although it is not essential to the arguments I want to make—-which concern what monetary policy should do now, not what it has done in the past—-I tend to agree with the conventional wisdom that attributes much of Japan’s current dilemma to exceptionally poor monetary policy-making over the past fifteen years (see Bernanke and Gertler, 1999, for a formal econometric analysis). Among the more important monetary-policy mistakes were 1) the failure to tighten policy during 1987-89, despite evidence of growing inflationary pressures, a failure that contributed to the development of the “bubble economy”; 2) the apparent attempt to “prick” the stock market bubble in 1989-91, which helped to induce an asset-price crash; and 3) the failure to ease adequately during the 1991-94 period, as asset prices, the banking system, and the economy declined precipitously Bernanke and Gertler (1999) argue that if the Japanese monetary policy after 1985 had focused on stabilizing aggregate demand and inflation, rather than being distracted by the exchange rate or asset prices, the results would have been much better. Bank of Japan officials would not necessarily deny that monetary policy has some culpability for the current situation. But they would also argue that now, at least, the Bank of Japan is doing all it can to promote economic recovery. For example, in his vigorous defense of current Bank of Japan (BOJ) policies, Okina (1999, p. 1) applauds the “BOJ’s historically unprecedented accommodative monetary policy”. He refers, of course, to the fact that the BOJ has for some time now pursued a policy of setting the call rate, its instrument rate, virtually at zero, its practical floor. Having pushed monetary ease to 2 Posen (1998) discusses the somewhat spotty record of Japanese fiscal policy; see especially his Chapter 2.its seeming limit, what more could the BOJ do? Isn’t Japan stuck in what Keynes called a “liquidity trap”? I will argue here that, to the contrary, there is much that the Bank of Japan, in cooperation with other government agencies, could do to help promote economic recovery in Japan. Most of my arguments will not be new to the policy board and staff of the BOJ, which of course has discussed these questions extensively. However, their responses, when not confused or inconsistent, have generally relied on various technical or legal objections—- objections which, I will argue, could be overcome if the will to do so existed. My objective here is not to score academic debating points. Rather it is to try in a straightforward way to make the case that, far from being powerless, the Bank of Japan could achieve a great deal if it were willing to abandon its excessive caution and its defensive response to criticism." Prof. Benjamin Shalom Bernanke Japanese Monetary Policy: A Case of Self-Induced Paralysis? For presentation at the ASSA meetings, Boston MA, January 9, 2000. A Credit Free, Free Market Economy will correct all of those dysfunctions. The alternative would be, on the long run, to wait for the physical destruction (through war or rust) of most of our productive assets. It will be at a cost none of us can afford to pay. This Age of Turbulence People Want an Exit Strategy Out of Credit,
An Adventure in a New World Economic Order. A Specific Application of Employment, Interest and Money [For Economists]. Press release of my open letter to Chairman Ben S. Bernanke: Sorry, Chairman Ben S. Bernanke, But Quantitative Easing Won't Work. http://www.prlog.org/10162465.html Yours Sincerely, MC Shalom P. Hamou Chief Economist & Master Conductor 1776 - Annuit Cœptis. -
Ray Tapajna Lets go back in time and see where Japan resides in the global economic arena. It is the turn of the century. Japan is an island nation surrounded by water. It does not have enough natural resources to support itself or advance in the manner to keep up with the major powers. Geopolitically it is isolated while a similiar country - England enjoys the rewards of having an empire across the globe. The U.S.A and Japan make an argreement know as the Root-Takahira Agreement to acknowlege Japan had a right to the mainland under the practiced Open Door policies. Japan claims parts of the mainland later on. Then the U.S.A recinds the agreement saying it was never really an agreement and incites Japan to war. The U.S.A. also disrupts an agreement between England and Japan over the control of international rights at sea. World War 2 follows. Japan felt betrayed. After World War 2, international money powers chose to use globalization as a way of avoiding these conflicts especially since England lost its empire. Instead of duplicating successful economic models, and establishing local value added economies using fair trade as a tool, globalization was used to move production from place to place for the sake of cheaper labor. Free Trade became an instrument in making production portable but unfortunately the main factor became the cost of labor. Workers and labor became the actual commodities being traded and not products. Historically trade was about trading for something you have for something you do not have. Free Trade should not be called trade since labor became the commodity being traded. You can get into all the economic factors you want and the changing manufacturing processes in Japan but it really is an example of what good have been and should have been if we really had fair trade. Now it is one hundred years later and nothing has really changed. A country like Japan needs an Open Door policy - not based on seizing others geography but based on real trade where the emphasis is on creating local value added economies and not hacked up pieces of economies strewed across the globe that are out of control being based on a new war for cheaper and cheaper labor. Even Adam Smith, who is used by the Free Traders to defend their process, held labor as something sacred and the core of all societies. Why would anyone want to deflate this valuable tangible economic value and play funny money games. Don't they know that the value of labor supports the value of money? Nothing makes sense if you keep degrading the value of workers and labor. Simply speaking, they can only buy as much as they make from the things they make or grow. If impoverished workers can not afford to buy the very things they make, how can anyone expect them to buy what other nations have to sell.
