The US Economy Is In Bush Liquidity Trap

[Demeter]

According to Paul Krugman's book, "The Return Of Depression Economics", copyright 1999, a liquidity trap occurs when consumers can no longer support the economy, and government refuses to take up the slack.

The big fraudulent stock market crash we endured in Bush's first 2 years wasted a lot of capital from a lot of people, reducing their liquidity and their assets and their ability and desire to spend--hence a contraction of demand for goods and services. Their (our) money ended up in the pockets of a few unscrupulous wheeler-dealers, who couldn't spend enough, fast enough, to get the money back into the economy, in spite of the obscene amounts of cash thrown at the GOP for stealing elections. Some of the rich got slapped with token fines, some suffered actual paper losses, I don't know of any outside of the accountants that actually went to jail (yet), but most got away with the loot. And then the government itself was drained of its liquidity by the combination of Vush's tax cuts for the richest, and an increasingly expensive bunch of futile wars. Which explains why even when interest rates were negative, Greenspan couldn't jolt the economy back in motion. Without taxes to channel the piles of wealth back into the economy, the economy goes into a death spiral.

This isn't rocket science, either. It's well-understood, even by fossils like Greenspan. So why is he supporting permanent tax cuts and raising interest rates? Stay tuned, same bat-time, same bat-channel.

[purduejake]

1. He must not want to die in a plane crash.

[Demeter]

2. You Mean Greenspan?

COuld be--although the man is so powerful and wealthy and safely invested in T-Bills, one would think him impervious to any threats BushCo could issue.

[satya]

3. I'm not so sure T-bills are a safe investment.

If * keeps up the sabre rattling, China, Russia, & others may just decide to sit out a few T-bill auctions.

[Turbineguy]

5. The problem is

you cannot very well collapse the economy and then say "see, I told you so"

Until the collapse, the Bushies won't see it and the fundies will think it's the rapture.

So we are stuck with a theory that we woiuld rather not prove.

[eg101]

4. Krugman talks rightwing in Dem regimes and leftwing in GOP regimes

hypocrite....

[Demeter]

7. If you meant Greenspan, I agree

Krugman speaks economics, which has no persuasion. Greenspan, on the other hand, spent years castigating Democrats about deficit spending, and now that Georgie does it, it's quite all right.

[Demeter]

6. One Has To Ask: Why?

Why does Bush want to cause a Great Depression?

Does he think he will gain some advantage from it, or does he think that it will never happen again, despite all the deregulation and wealth shifting he and Reagan have done?

Qui bono?

[On the Road]

8. The Rich Have Always Benefitted from Crashes

Those with money and liquidity buy real estate, stocks, and other assets at deep discounts after a crash. (Coincidentally, this was one of the cornerstones of Nazi hatred of the Jews, many of whom benefitted from the recession and inflation after WWI.)

Not saying Bush is planning a recession. Greenspan certainly isn't --m he isn't eveb rich. But there's much less concern for the consequences.