DISCUSSING MONEY AND POLITICS

02/13/2009

DISCUSSING MONEY AND POLITICS

FOR SOME IT IS DIFFICULT TO SEE THE CONNECTION BETWEEN THE MONEY MESS WE ARE IN AND THE POLICIES OF THE GOVERNMENT OF THE UNITED STATES. TIME AND AGAIN I HAVE TRIED TO GET THE PEOPLE TO SEE HOW THE TWO ARE INTER -RELATED, HERE AGAIN I TRY TO EXPLAIN.

The discussion started on the blog of Teagan Goddard's political wire, about how Dodd will write a book, about the financial crisis

http://politicalwire.com/archives/2009/02/12/dodd_will_write_book_on_financial_crisis.html#comment-6228944

here is what i had written

Will he explain how the politicians were bought off, How the SEC turned a blind eye to an obvious and on going scam, will he say how free trade and real jobs being lost to slave labor in Chinese and Indian factories made US workers useless. How cheap debt, (lower interest rates) made available to the federal government to make deficits low (lower interest on the cumulative national debt), created the housing bubble. How so called democrats, representing the workers fell in bed with the bankers on Wall Street? '''

And to this a mr jiriskin replied

slave labor in Chinese and Indian factories" To the extent that slave labor does or does not exist in these places, it is not a factor in the loss of US jobs. In India for a long time and in China in the last decade there has been a more-or-less free market in labor at wages that are better than the subsistence wages of the countryside. We lost jobs because enough others CHOSE to work for wages sufficiently lower that the cost of shipping finished goods back here did not make up the difference.There are enough legitimate arguments around free trade that you don't need to bring up this (now very old) red herring."cheap debt, (lower interest rates) made available to the federal government" This is really confusing to me. You want the government to offer to pay a HIGHER interest rate to its lenders?"(lower interest on the cumulative national debt), created the housing bubble" I'm no economist, but my understanding is that the real interest rate on ARMs and other weird instruments was actually quite high, that the teaser rates were loss leaders that had nothing to do with what the government pays for its debt, that a lot of investors engaging in wishful thinking bought these now-securitized instruments without doing due diligence. How does your theory fit with all this?"so called democrats, representing the workers fell in bed with the bankers" well, yes and Republicans and workers' pension funds and the workers themselves, and just about everybody else".

There is a phenomenon, called "the inter-connectedness of things", also some times called "the butterfly effect".

Thus" "slave labor in Chinese and Indian factories"

""To the extent that slave labor does or does not exist in these places, it is not a factor in the loss of US jobs. In India for a long time and in China in the last decade there has been a more-or-less free market in labor at wages that are better than the subsistence wages of the countryside. We lost jobs because enough others CHOSE to work for wages sufficiently lower that the cost of shipping finished goods back here did not make up the difference.""

Do we forget that these places are over populated, As related to the number of jobs available, thus people there will work for extremely low wages as per required by the free market standards? And that when we move some of "our" jobs overseas because of low wages the number ob jobs in this country is reduced thus the pressure on wages here is eliminated and the people on the lower end of scales have actually a lower wage growth. The numbers here prove it everyday.


Mr Jirisken writes ""cheap debt, (lower interest rates) made available to the federal government" This is really confusing to me. You want the government to offer to pay a HIGHER interest rate to its lenders?

No I do not want the federal government to pay high interest rates, but,

1/ the extremely low interest rates have reduced the incentive to save,

2/ extremely low interest rates have allowed the government to borrow more and more and not to raise taxes, but if and when ( and it will) inflation starts to rise and there is a need to to raise the interest rates, the interest on the cumulative federal debt will increase in such a manner that the government could not even pay the interest on the debt with the current tax income and will have to reduce services and benefits and will go in default.

3/ the extreme money growth along with the artificially lower interest rates under the
Greenspan FED did allow Mr. Bush to finance his two wars with borrowed monies, but it also allowed the bankers and hedge funds and speculators to finance the housing bubble as well as allowed the American consumer to live beyond its means.