Have WE been Sold OUT? The Chart That Explains Everything

[Ferd Berfel]

I'm not an economic genius or even wonk so I don't know if he's correct or not. But I found this interesting.
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http://www.counterpunch.org/2016/01/15/the-chart-that-explains-everything/

Why is the economy barely growing after seven years of zero rates and easy money? Why are wages and incomes sagging when stock and bond prices have gone through the roof? Why are stocks experiencing such extreme volatility when the Fed increased rates by a mere quarter of a percent?

It’s the policy, stupid. And here’s the chart that explains exactly what the policy is.
(snip)

What the chart shows is that the vast increase in the monetary base didn’t impact lending or trigger the credit expansion the Fed had predicted. In other words, the Fed’s madcap pump-priming experiment (aka– QE) failed to stimulate growth or put the economy back on the path to recovery. For all practical purposes, the policy was a flop.
(snip)

Basic economic theory suggests that when private sector can’t spend, then the government must spend to offset deflationary pressures and prevent a major slump. Cutting the deficits removes vital fiscal stimulus from the economy. It’s like applying leeches to a patient with flu symptoms thinking that the blood-loss will hasten his recovery. It’s madness, and yet this is what Obama and the Congress have been doing for the last six years. They’ve kept their hands wrapped firmly around the economy’s neck trying to make sure the patient stays in a permanent state of narcosis.

That’s the goal, to suffocate the economy in order to reward the thieving vipers on Wall Street. And Obama and the Congress are every bit as guilty as the Fed.

[NorthCarolina]

1. Here's the chart

[Ferd Berfel]

2. TX

[mmonk]

3. Yes

[Cary]

4. Presidents don't make laws

Absolutely we should be spending more on infrastructure and education. In addition to the stimulative effect we have a $20 trillion infrastructure maintenance deficit. What's the diffeiference between a budget deficit and an infrastructure maintenance deficit? The maintenance will cost exponentially more down the road, so it's worse than a budget deficit.

But this is Republicans' doing and it's insulting and stupid to blame this on Democrats.

[Ferd Berfel]

6. Sounds more like Bernie's program than anything else

[Cary]

8. Sanders will be obstructed by the traitors too.

Talk is cheap. Blaming the victims of Republicans' obstruction enables Republican traitors.

[Ferd Berfel]

9. Bernie will have much larger coat tails than Hill.

Bernie motivates people to get off their butts. And at the second House election cycle we will have a Democratic House again.

[Cary]

15. Right

Don't you just love sugarplum fairies?

[highprincipleswork]

12. Obstruction didn't do it.

Even before "obstruction", when we actually held both houses of Congress, the economic plans did not get the most money to the people who would circulate it the most, namely the less well-off. The plan was a modified version of trickledown economics, which has been largely in place since the days of Raygun.

Incentives to ship jobs overseas, versus penalties.
Economic support for banks and other structures like that, when spending on infrastructure puts the money into jobs and in the hands of people who will actually circulate that money.
Money to banks with no strict rules that are enforced on interest rates or on what they need to do with that money to get it out there where it is needed.
No prosecution of those who caused the crash in the first place.

These things go on and on and on, with no champion who will stand up and put an end to it, and get us back into the philosophy and practice of doing something else. Like F.D.R. did, long before the days of Raygun.

That's what we need again. That's what I believe Bernie Sanders represents, a staunch and unrelenting crusader for what is right in these areas for the common person.

It defies all logic, in my mind, why so many people who are Progressive will just fight him on this, or choose to try to bring him down, or suddenly fight against principles they have advocated in the past, or will simply not join him in trying to change such things.

One knows or should know these things are popular. Bernie is just harnessing that energy, whenever he has a success, and he has had to do it without mass media support, without even the DNC being fair about its nomination process, with all sorts of establishment types going along with what we have gotten used to as "business with usual", which truly SUCKS!!!!

We should know for sure that it wasn't always this way. That so much of what we do by habit now is the result of just wrongful thinking that has gotten ingrained like a bad habit. Please, join this movement in whatever way you can, with whatever muscle in you that responds to its call. This is one of our truly great moments, and we should seize the day.

[Cary]

16. Funny...

He caucused the right way, I will give him that. But he didn't seem to move any moderate Republicans or blue dogs.

I think your are naive. Just my opinion.

[highprincipleswork]

17. Is it necessary to be condescending?

Your comments "funny" and "naive" are simply that. I don't believe I have called you those names or any names at all.

It's quite clear to me that very little was done to effect the changes that I'm talking about. Very little conviction. Very little follow through. Sometimes no attempt at all. And sometimes what outside observers have called very poor negotiation.

As Democrats, we have gotten used to accomplishing so little, in the shadows of Ronald Reagan. Even when the philosophies that he and others around him espoused are so clearly wrong, especially in the realm of economics. Disputed by many, many, many economists, other than those steeped in "The Chicago school".

Even President Obama's policies and his advisors were typically schooled in the Chicago School of Economics, his advisors the same.

There are other times and other ways and other theories of economics, and if you look around at the devastation caused by those currently in place, I would hope you and I could agree that there's got to be a better way that serves more people.

[Cary]

18. I am entitled to find you naive

And your understanding of economics and policy reality to be more emotional than rational.

President Obama took what he could get. He has been a great president. I have nothing against Bernie Sanders but he will have to face the same realities.

I don't do cults of personality. Sorry if you find that to be condescending.

[highprincipleswork]

19. You are condescending. But that's your own problem. Live with it.

I'll put my knowledge and my training and my education and my smarts and anything else you'd like to name up against yours any day.

Bernie Sanders well knows what it is to face realities. He just doesn't let limitation define him. Do you?

[Cary]

21. If you're so great then stop being defensive and irrelevant.

Do you know rhe difference between mainstream neoclassical synthesis salt water and fresh water?

You accused Austan Goolsby of being a monetarist. I'm not impressed.

[highprincipleswork]

22. Like I say, live with it. I'm going to go phonebank.

[eppur_se_muova]

7. ^^THIS^^ ... and ...

let's not forget that as big as Obama's first-year stimulus (actually initiated under GWB, let's not forgeet) was, it was criticized even at the time as not being big enough to really turn the economy around. Since then, it's been suggested that something like 2.5-3 times that amount would have been needed, which is why the recovery hasn't been robust enough, particularly in terms of creating jobs. But Congress balked at the (already insufficient) amount being called for, so it got trimmed down to a barely effective size.

[House of Roberts]

5. Even Keynesian stimulus doesn't help much

when the durable goods aren't made here anymore. You can only support so many service, retail and restaurant jobs with a given number of manufacturing jobs, plus the extraction sector. Without considerably more manufacturing, and increasing infrastructure rebuilding, the economy can't improve for the workers. There simply isn't enough demand for labor.

The 'vast increase in the monetary base' all went to the already wealthy, who increased their wealth with an increase in the stock markets, the only place we saw real inflation. The 'correction' we're seeing is those wealthy calling 'hot potato', which means it's time to bail out before the next crash.

[Octafish]

10. One link shows how.

UBS proves it's buy-partisanship, loving both Phil Gramm and Bill Clinton.

Since the repeal of Glass-Steagal, they've specialized in all kinds of Wealth Management:

http://financialservicesinc.ubs.com/revitalizingamerica/SenatorPhilGramm.html

[hfojvt]

11. sold out?

The author seems to put Congress and Obama in the same boat.

The House has been Republican controlled since January 2011. So any stimulus besides tax cuts has been legislatively impossible.

As for QE, well I always looked at it like this (although it is upside down). The economy often goes up and down - boom and bust. Good times and slumps.

During the booms, the economy is rolling. Imagine a truck rolling down a hill. Raising interest rates can slow the descent. But when the economy gets to the bottom of the valley and needs to go up the other side (the slump). Well, take your foot off the brake as much as you want, that truck is not gonna roll UP a hill that way. The economy needs gas - more fiscal spending. Instead, thanks to the Republican House, we have gone the other way.

Obama has gone along with it. Well, unfortunately, he was facing a government shut down, AND, the fact is - Republicans control the narrative in this regard.

[hedda_foil]

13. The facts in this piece appear sound. The interpretation seems OTT.

The author's actual reporting is impressive, though we at. DU were aware of most of it at the time, so it wasn't all that hush-hush. It's when he goes from there to his opinion of the human motives behind the Fed's and administration's actions that it moves into the realm of the polemical.

[randome]

14. One chart NEVER explains 'everything' any more than a soundbite passes for discussion.

[hr][font color="blue"][center]"If you're bored then you're boring." -Harvey Danger[/center][/font][hr]

[Odin2005]

20. Counterpunch is edgy BS for high school anarchists.