At Asia Times Online Julian Delasantellis waxes nostalgically about olden days when Congressional budgetary actions signed into law by the President were thought to be at least as effective as the Federal Reserve Board's actions to keep movements of the economy under control.
As examples, Delasantellis notes LBJ's 1967 push for a 10% income tax surtax "to deal with the inflationary effects of Vietnam War deficit spending" and Ronald Reagan's "budget-busting tax cuts and defense buildup" to deal with the stagflation of 1981.
Although there were consequences - the Vietnam War and the income tax surtax drove LBJ from office, while Reagan and Congress enjoyed the pursuits of their fiscal policies which permitted them to "ladle tax cuts and government spending over their constituents like thick country gravy. "
Excellent stuff here. Please note:
(1) Deficit war spending is inflationary.
(2) President and Congress like to give TAX CUTS and GOVERNMENT SPENDING to
their constituents.
Delasantellis points out that Congress and the Fed are working at cross purposes, with Congress giving a $307 bn farm bill over five years along with a $160 bn "fiscal stimulus / rebate" initiative to spur the economy, while the Fed continues to rapidly lower interest rates to keep inflation at bay.
In a refreshingly candid and vivid image of utter madness, Delasantellis mentions the urging of American consumers to spend their stimulus / rebate checks on "more imported Chinese home electronics."
Additional notes
(3) We don't make much hi-tech consumer stuff here no more.
(4) We ARE the world's #1 arms dealer with about 50% of market share.
Of course, the reason the Fed lowered interest rates so often, so fast, and so much is to keep the stock markets propped up. After all, as long as the markets are up, the economy is doing well. No?
The key conclusions:
[A] By selling controlling interests in 100's of LARGE (formerly U.S.) companies and U.S. government debt, America has sold away the right and the ability to control its own economic destiny. U.S. economic woes have been self-inflicted.
[B] Elsewhere, the economies of China-India-Russia-Brazil are going well. There's a party going on. We're not invited.
