Forum Post: Reject Austerity!
Posted 13 years ago on Nov. 25, 2011, 1:49 p.m. EST by Pingry
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At this point, in my opinion, I think the most important topic on which the OWS movement should concentrate is to reject austerity and point out that the liquidationists have been dead wrong about their fantasy of expansionary austerity.
They’ve been wrong about high inflation; They’ve been wrong about high interest rates; They’ve been wrong about a robust “U-shaped” economic recovery; And they’ve been wrong about how austerity would engender “confidence” to spur growth.
Austerity has always failed and it’s failing in the US and Europe as we speak. And, I should add, that most of the austerity is a burden on the poor, unemployed and those in ill health—not on the rich who can weather the violent economic storm that many of them engineered.
We’re entering an even more dangerous economic environment in which the breakup of the Euro and European austerity could negatively spill over to a very weak US economy. An OWS strategy of visibly rejecting austerity in the face of mass unemployment and pointing out their epic wrongness could put the ball in the court of the liquidationists whose macroeconomic forecasts and devastating policy prescriptions have created this mess as we hopelessly drift toward a lost decade or more.
They need to be on the defensive as to why they are consistently and disastrously wrong. They should be called out for inventing absurd theories on the fly and twisting and lying with data to justify an intellectually bankrupt ideology.
Right now it seems like we're very much on the defensive. Below is a very salient point made by Paul Krugmanabout how our enemies are trying to use "affinity fraud" as a way to paint the movement as a bunch of fringe characters:
"Right now, the campaign against OWS basically tries to get working Americans to turn on the movement, even though most people support the movement’s goals, by trying to make it seem as if the protestors are people not like you — whereas the plutocrats are. Hey, this has worked many times in the past; that’s the whole point of “What’s the matter with Kansas.” And it can operate in many directions: OWS should be shunned because they’re dirty hippies, Elizabeth Warren is not-like-you because, horrors, she’s a Harvard professor."
http://krugman.blogs.nytimes.com/2011/11/17/madoff-explains-everything/
Jobs and sales are both dependent on “demand,” which means getting money into the pockets of consumers; and the money supply today has shrunk.
We don’t see this shrinkage because it is primarily in the “shadow banking system,” the thing that collapsed in 2008. The shadow banking system used to be reflected in M3, but the Fed no longer reports it. In July 2010, however, the New York Fed posted on its website a staff report titled “Shadow Banking.” It said that the shadow banking system had shrunk by $5 trillion since its peak in March 2008, when it was valued at about $20 trillion – actually larger than the traditional banking system. In July 2010, the shadow system was down to about $15 trillion, compared to $13 trillion for the traditional banking system.
http://www.newyorkfed.org/research/staff_reports/sr458.html
Only about $2 trillion of this shrinkage has been replaced with the Fed’s quantitative easing programs, leaving a $3 trillion hole to be filled; and only the government is in a position to fill it. We have been sold the idea that there is a “debt crisis” when there is really a liquidity crisis. Paying down the federal debt when money is already scarce just makes matters worse. Historically, when the deficit has been reduced, the money supply has been reduced along with it, throwing the economy into recession.
Most of our money now comes into the world as debt, which is created on the books of banks and lent into the economy. If there were no debt, there would be no money to run the economy; and today, private debt has collapsed. Encouraged by Fed policy, banks have tightened up lending and are sitting on their money, shrinking the circulating money supply and the economy.
http://www.webofdebt.com/articles/market_spoken.php
What do people who reject austerity favor? Gluttony? Unsustainability?
Are you familiar with what Keynes, and more recently Paul Krugman have written? Gluttony is, I think, a very ambiguous term. I would rather have more precision by increasing aggregate demand by increasing spending. We live in a very Keynesian world in which free markets fail at the macroeconomic level.
Sorry, I reckon that my HTML tag didn't work. The penultimate paragraph should read:
Right now it seems like we're very much on the defensive. Below is a very salient point made by Paul Krugman about how our enemies are trying to use "affinity fraud" as a way to paint the movement as a bunch of fringe characters:
Good post.