A SPECTER IS HAUNTING AMERICA
Oooooo, socialism. The monster, the invader, the scary beast at the door we've been warned of forever. Hell, McCain and Palin invoked this specter during the election. Obama "promised" it in his own way.
But the socialism that we're living under, the socialism that will surely keep coming in the next few years, is not the socialism that Marx awaited, nor that American capitalists feared. Hell, it's not the watered-down socialism that FDR introduced either.
This is bottom-up socialism.
And as the cartoon at right demonstrates, the bottom that the bottom is under is BIG. Make no mistake, the "wealth" of the middle class is shifting inexorably upward. U.S. government bailouts, cushy loan packages, debt-for-equity swaps, purchases of bad assets at grossly discounted prices. These are redistributions of wealth. There's no other definition.
All of this wealth, this money, this capital comes from the U.S. citizenry. Taxation in one way or the other. Not to wade to deeply into economics I don't understand well enough to explain clearly, but there are three ways the U.S. government "creates" this wealth that it's floating upstream. And all three of those are "taxes" on our savings, on our future earnings, on our children and children's children:
Direct tax, debt, inflation. That's it. The government is not creating -- via investment, via manufacturing, via market-denominated lending -- any wealth. No. It's pulling money, or the promise of future money, out of its ass and out of our pockets.
Taxes? I think we all get that one. Debt? I hope we're all starting to get that one one too. Future debt needs to be serviced. Interest paid off. Additional principal to sit on the balance sheet. And . . . individuals, enterprises, banks, and foreign nations willing to buy the gar-bage the U.S. government is peddling. And what happens when those buyers stop appearing at the discount window, asking for those junk bonds with the eagle on them?
Well that, as they say, is the rub. And that's where the most insidious beast, the scariest specter of them all, shows up: Inflation. Simply put, when no one buys the debt -- the future debt needed to pay for the things we've previously paid for with the older debt, plus the interest on that older debt -- the Federal Reserve prints money and buys the debt that no one else wants.
"Prints money," for those of you who don't wanna acknowledge it means it pulls money out of thin air. Which increases the money supply. You don't have to be an economist to understand that this graph is pretty indicative of an incomprehensible increase in the money supply.
"So what?" you may ask. Well, an increase in the money supply, chasing a static (or even falling) demand for goods, services, credit, and investment is inflation. In-fla-tion. For the moment, as we all know, the banks aren't lending, the consumers aren't purchasing, and the investors aren't investing. But when they do? Oh boy, is the cost of living gonna go up. Waaaaaayyyy up. And that is a tax on us. A hideous, nefarious, tidal wave of a tax, a tax with no loopholes. It takes a bite out of savings, out of salaries, out of investments, out of the future. It's eats away at wealth and leaves nothing.
But for the moment, that extra money is just sitting. No price inflation yet. And that brings us back to where I started.
Because who's been getting this massive increase in wealth? Well the answer lies in the news we read every day: any and all who've received bailout money, or below-market rate loans. AIG, American Express, Goldman Sachs, the list goes on. The very wealthy, the most powerful, the best-connected. Those who helped get us into this mess in the first place. They've been getting this money. And for now, they aren't sharing it.
Thieves tend not to share the spoils of their pilfering with their victims.
We've been bamboozled, hoodwinked, ripped off as we slept. I'm not sure what we can do at this point, but realizing it may be the first step. Not participating in, or approving of, your own victimization is the second.
The third? I have no idea, but it'll be something if and when the day comes.