Saturday June 11, 2011...Aftershock

Afterthoughts and reflections after reading “Aftershock” by Robert Reich

He clearly drew a picture of what happened to cause the Great Depression (1929-1946) and what brought us out of that financially burdensome time into The Great Prosperity (1947-1975). Marriner Eccles chaired the Federal Reserve Board from 1934 to 1948. His advice and actions inspired the correct financial response by our political leaders and pulled the economy up from the depths. He clearly saw that money had to be available for the common man and his family and that with a healthy financial community the manufacturing would also benefit. He inspired Franklin Roosevelt to help and encourage the poor, the elderly and the working man with jobs and safe banks and secure homes and social security in our old age. Herbert Hoover and the previous administration had been following the old ways and assumed that the economy would self correct. He was wrong to trust the special interests and big bankers. Eccles clearly saw that their way would not stimulate the economy. They wanted to cut government services and let business find the way just as the current Republican Wall Street bankers are advising now. Luckily we had Mr Eccles then. Now is a different story.

The monied interests now control the political system and the business systems and they have no consideration for the poor or the middle class. They are greedy to the extreme and would deny sharing their wealth with the system that gave them this wealth. Even though the very wealthy have more wealth than they can spend, they still reach for more. The politicians need huge amounts to run their campaigns and know that they owe their jobs now and after leaving government service to those with the big bucks. Republican and Democrat alike respond to the desires of the wealthy. They are unlikely to bite the hand that feeds them. We look forward to diminished government services and a much lower standard of living, unless you're wealthy.

One scenario that Mr Reich put forth as an extreme backlash to the present situation was really quite frightening in its implications. A mythical third party wins the presidential and congressional election with a message of zero tolerance of illegal immigrants, a freeze on legal immigration, increased tariffs on all imports, a ban on American companies moving operation overseas or outsourcing abroad, withdrawal from United Nations, World Trade Organization, World Bank, and IMF, refuse to pay any more interest on our debt to China and stop trade with China. They would prohibit profitable companies from laying off workers or cutting payrolls. The federal budget would be required to be balanced. The Federal Reserve would be abolished. Banking would be restricted to deposits and loans. No investment banking. Capping personal income at $250,000 per year – everything above $500,000 to be taxed at 100%. – The stock market crashes, the dollar plummets, banks close, economic calamity.

Robert Reich sees the problem and offers his suggestions on how to solve them without destroying the country, but even he acknowledges that no change will probably occur until the systems crashes and forces reforms. The Great Recession that we are in the midst of wasn't quite strong enough to bring about the required resolve. The future holds the answer.