@ John Jay – I don’t quarrel with your argument at all. But, to be fair again, it was Nixon who “opened China” as the Armand Hammers of the day wanted (Hammer, BTW, traveled quite a bit behind “the Iron Curtain” and was quite fond of the idea of free trade with the Soviets). Forty years ago, we found ourselves dependent upon OPEC for oil and gas and China and the rest of the Third World could only afford to buy Coca-Cola and KFC. And all the restive multinationals at the time looked at all those populations behind “the Iron Curtain” and dreamt of the day and the ways and means to get all those people to be able to afford what the multinationals sold – the Maytags, the Fords, the Caterpillars. It was Henry Ford who paid his workers an enormous sum for their wages in order to have them able to buy what he and they made. So the multinationals, following future Supreme Powell’s advice started buying the Congress. Dwayne Andreas at ADM was one of the first and most famous and showed the way to bribe both parties. So what if the American middle class lost its jobs. As Milton Friedman advised – and Maggie Thatcher agreed – it is the work of the corporation to benefit its shareholders, good works for the benefit of the nation were not to be contemplated in the calculous. And Thatcher? Reagan’s ally said “There’s no such thing as society”.

@RA – the latest on the Hayek set of theorems has been the resounding disproving of Reinhart and Rogoff. The unemployment payments to those looking for work in an environment in which we have the two tiers of the executive suite and the hamburger flippers has largely been wasted and tragic in both the cases of those workers who will continue to fall down the class structure with the ladder willingly taken away and tragic for the future of this country. While unemployment pay is taxed as income, it is still a wasted drain on the nation’s purse if the multinationals who’ve bought the last several decades of the political system sit on enormous profits and only hire overseas or stuff their own pockets. Listening to pols of all stripes, they’ve all agreed that all those middle class jobs that went overseas will never return. Well, we’ll see. Who knows, maybe the shipping costs make clothing in Pakistani fire traps uneconomical, maybe paying $1,000 per hour for your several tax attorneys and former IRS tax accountants to press on all those tax loopholes while this nation goes the barbaric route altogether to kill their encroaching, starving neighbor who wants in to the reinforced shelter for what they will begin to see as “their share of the food”. High flown airy fairy economic theory, particularly of the kind that has been disproven for its spreadsheet mistakes, but more importantly for not factoring the nature of the elemental need to feed oneself and one’s family even when all the means of production you contributed to years ago but were given away to the Chinese will never return and you. can’t. find. work. Hayek’s advice, like Friedman’s, Reagan’s and Thatcher’s, only addressed the wants of the already haves but will never have enough so long as there’s someone richer than me. As for the rest of the 95% who find themselves slipping down the rathole of a burgled economy and one-time manufacturing wonder…eh, let ’em eat insects. I hear that’s all the rage these days in some quarters of the “thought leaders'” advice nouveau cuisine. Here, eat an ant. Good protein.

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Seems you’ve got better footing in the dismal science than I had inferred, Magus, and so I’m mystified by your defense of Bernanke’s attempt at alchemy. Anyway, if Americans had invested mainly in capital equipment rather than in real estate over the last 40 years, our manufacturing sector would be trouncing China’s and Korea’s. Instead, we are seeing real wages fall, as they must, to make the U.S. competitive again. RA

Addendum to RA – I am puzzled by your assertion that the US should have invested in mainly capital equipment instead of real estate 40 years ago. I have a couple of grounds. First, 40 years ago we had the beginning of family formation by us boomers – 75 million and upwards of those needing housing and, at that time, what the US experienced as hyperinflation. Interest rates at that point went over 15%, largely because of the guns and butter policies followed by both parties (again). We had the first oil crisis and the increasingly insane costs of running the 20-year Vietnam War. The most most powerful sectors that form the basis of our economy are housing and all the industries that feed into that, and cars and all the industries that feed into that. The second ground stems from that – we were financially fortunate enough to afford a car for each teenager who reached 16 years old so that part of the economy could keep going and the only competitor at that time was Japan with its low-cost, very reliable entry-level cars and trucks. So…relatively few problems for a myopic domestic sector and its influence on policies in DC. We gave up the low-cost, reliable, entry-level cars and trucks to Japan and they therefore gained the foothold they needed in order to 20 years or so later come up with Accords, Infinitis and Acuras. (Pay no attention to the bloated exec suites at GM and Ford who reaped huge salaries, bonuses and stock options, thanks to their influence on not only fuel efficiency legislation but tax policy. Chrysler suffered from another problem: Iaccoca, perhaps one of the best car men this nation ever produced, was not allowed to compete with Ford and GM overseas in return for the gov’t loan. But that’s another issue for another day.) No, the second basis for what I surmise (perhaps mistakenly) with your assertion is that a household only needs one washer and dryer, one fridge and maybe a freezer. Yes, the kids will need those, too, as they go out on their own but, as my father at the time said (he sold materials handling equipment), the domestic market was saturated for the serious capital goods – the Caterpillers, the Hysters, etc. GM, Ford – already in Europe but by golly, look at all those Asians with their rickshaws….wouldn’t it be glorious to pierce that market. These are the capital goods that had already saturated the domestic market and because the Japanese were turning out more reliable equipment, that squeezed everything even further. It used to be that you traded in your old car at 3 years because it was already a drain on your pocketbook – it wasn’t made to last beyond 3 years…until those damned Japanese brought in their reliability. These days, we may sell Caterpillers overseas but I don’t see many in the US. I see Kubotas, Huskvarnas….

As for wages must fall to compete – how come that’s reserved only for the little people? And in this age of which country is the off-shore banking haven for which country (and the US is one for many other countries), a couple years ago Obama signed a “free trade agreement” with Panama. So, what does Panama offer that we as a nation could possibly want? Well, 95% of us would say “Nothing.” But the other 5% and, with the opening of Panama Canal able to accommodate ginormous freighters? Just another stopping point for the tax dodges to be written in and another place for the owners of those shippers to hide their money tax free. And still no employment in the US.

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Save your breath, Magus. Like Bernanke and his benighted minions, you’ve bought into the very essence of The Big Lie –that consumption begets wealth. RA

Magus12 wrote >> “Bernanke offered a way out that was utterly wasted – zero % debt to employ sufficient numbers of unemployed to prime the pump and create the demand that will rebuild the infrastructure that threatens to give way.”

Lol Bernanke’s low rates do NOT induce businesses to employ more people and do just the OPPOSITE. Low rates give business the wherewithal to invest in software and hardware (with low/no interest rate debt) to REPLACE or supplant former employees with automation or higher productivity tools.

Your love of Bernanke and his totally fraudulent “low interest rates” is very much misplaced.

@Carol – you completely missed the point. The private sector was never going to restart employment in any meaningful way in the US anyway. They’ve sat on trillions in profits earned in the US and “repatriated” a few years ago at the rate of 5% taxation instead of the 35% rate they constantly cry about. That being the case, if the politicians in the back pockets of Wall Street and the multinationals refuse to pick up the slack, preferring instead to further fleece the taxpayers who bailed them out 5 years ago by buying up residential real estate in bulk and playing the stock market as the house while the rest of us try make a bit in the stock market, THEY are your bad guys. Bernanke offered another way out and jawboned the crooked Congress to do their jobs. They refused because the Supremes gave them the incentive to screw the country and pocket the largesse that Wall Street and the multinationals lavish upon them. That way was to finance rebuilding infrastructure at zero interest (you prefer to rebuild under inflationary rates?!?) instead of giving the money in unemployment, asking if those unfortunates had been looking for work the last two weeks while Wall Street and the multinationals refused to hire anyone in the US. GE? Obama’s BFF? The money went overseas, even the high end programmers. And GE not only paid zero corporate taxes they got a refund. You mistake my recognition of a secondary route out of the morass for “love for Bernanke”. I merely recognize his efforts both with providing the funding to do that pump priming and lecturing a thoroughly corrupt Congress to do the right thing by the American people. But perhaps you prefer Maggie Thatcher’s ethos: “there’s no such thing as society.” Until it bites you in the ass.