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Troubleshooting is an art form. Trying to find out why a system, mechanical, electrical, structural or otherwise, isn't working properly and what, specifically, is causing the problem is a skill. Last winter I called my HVAC guy to troubleshoot my smart-controller driven, high efficiency gas furnace. The guy was truly amazing in his troubleshooting skills. In a few short minutes, by asking me several quick questions over the phone, this experienced tradesman solved the problem I was experiencing.
There are millions of expert troubleshooters...problem solvers....throughout America and the world. These folks examine a situation, diagnose what the problem is, and then propose the proper solution.
So why have most of the world's economic troubleshooters throughout the world recession of the last few years only come up with the wrong answers?
The world has barely dug out of recession and the global economy is again slowing dangerously. Most leaders seem eager to make things even worse.
Instead of looking for ways to reignite growth, Europe’s leaders — and Republicans on Capitol Hill — are determined to slash public spending. Europe’s fixation on austerity is also compounding its debt crisis, bringing the Continent even closer to the brink.
If you were traveling and you looked down at your gas gauge and it was reading 1/8th of a tank.....would you stop the car, get out and proceed to drain the little gasoline you do have out onto the ground.....OR...would you get off at the next exit and fill up?
To American and European economic troubleshooters....the answer would be "drain the rest of the gasoline out."
Through Wall Street games of chance, through rampant fraud by loan originators, real estate appraisers, mortgage bundlers and derivative insurance salesmen.....paper and money shufflers in the U.S. and Europe have redistributed trillions of dollars from millions of average citizens into the hands of a few very rich people. The result, worldwide, has been a drying up of liquidity.
When your home is devalued, you don't have as much equity to borrow against to make other purchases or investments. Same with your 401K or IRA. If you don't have a job, you can't increase, or even maintain, your purchasing power. The result is lower demand for goods and services.
Instead of world economic troubleshooters recognizing that we have a demand problem caused by banksters risking everyone's money in impossible, and often insane, paper games of chance.....the world's economic troubleshooters have decided that our problem is that governments are spending too much and must cut back.
What has been suggested as the solution to our economic problems worldwide? Austerity measures. That would be akin to my HVAC guy telling me to go ahead and just shut the gas off to my furnace. 'Furnace acting erratically? Working, but not very well? Just shut off the gas until summer arrives.'
For the umpteenth time......cutting government spending during our current recession.....a recession marked by very high unemployment and extremely low interest rates....will only make our economic woes, worse. It isn't like the solution is not obvious. And yet.....to American and European economic troubleshooters...it is.
The U.S. government can currently borrow money at zero percent. With the 10 year T-bill yielding 2%, the nominal yearly rate of inflation, government borrowing, in essence, is at zero percent. Despite a banner couple of years for America's privileged multi-national Fortune 500 corporations, absent a surge in demand by consumers.....there's nothing that the private sector can do to increase employment or rescue the economy from it's doldrums. Any respectable economic troubleshooter would evaluate these mitigating circumstances and conclude that government, indeed, should inject much more money into our national economy right now....the same is true in some European countries as well.
Yet (almost) all the Serious Expert drivers of economic policy are still pushing for more cutbacks. More austerity measures. Less government spending...not more.
Yes, government debt must be considered in any serious troubleshooting.....however, if a nation's economy is forced to endure continued austerity measures, and it's economy continues to spiral downward BECAUSE of those austerity measures which take even more money out of the economic engine, how could that nation EVER pay it's debt?
Progressive economists like Krugmann, Stiglitz, Baker, Roubini and others....early on, did their economic troubleshooting and concluded that government absolutely must spend more money if a long term recession were to be avoided. Yet, they have been all but ignored.
Instead, cutting taxes on rich people, eliminating regulations on flush corporations, and Freddy Kreuger-style slashing of government spending.....all solutions from the Serious...are proving to be either opportunistic and cynical attempts to move even more money into the hands of the privileged, or simply a botched diagnosis of the problem.
My HVAC guy is sharper than that.