Charlie Rose

JonDIDit  12/19/2010 12:56 PM Report

I'd like to see him comment on those that pay into unemployment insurance for 30 years yet can only draw for 26 weeks as a rule...where is the money taken out of our checks for the rest of those years and why can't we draw on that so we are not at the "mercy" of the politicians who want for nothing????? If we die before we can claim our SS money why doesn't the money in that fund go to the family?

Ricardo_Amaral  11/08/2010 02:42 AM Report

This article covers a subjects that I have been writing about on my articles and postings for years.

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The Economist - November 6, 2010

Schumpeter: “The other elephant” - Barack Obama thinks that the rise of India will be good for American jobs. There is another side to the story

...Yet the rise of new economic powers always brings problems as well as opportunities for incumbents. New companies displace old ones. New business models disrupt established ones. Comfortable workers in the rich world are forced to compete with hungrier ones in the poor world.

India is producing a legion of new global giants that are competing head-to-head with established American companies. Look at Arcelor Mittal and Tata Steel in steelmaking; Bharat Forge and Sundram Fasteners in car parts; Hindalco in aluminium rolling; and a host of companies, including Infosys, Tata Consulting Services (TCS), Cognizant and HCL Technologies, in information services. Twenty years ago India had no global companies worth mentioning. Today the Tata group earns 60% of its revenues abroad, and Indian companies ranging from natural-resource firms, such as Reliance Industries, to health-care companies, such as Pirmal Healthcare, have been snapping up American brands.

American companies are also setting up shop in India. Bangalore and Hyderabad have “electronic cities” crowded with America’s leading companies. In Bangalore Cisco spent $1 billion on its Globalisation Centre East and General Electric (GE) opened a swanky research centre. IBM employs more people in India than in the United States.

For American workers the most worrying thing about all this is the flight of brain-intensive jobs to India. Americans reconciled themselves to the loss of manufacturing jobs with the thought that they would keep the smart jobs. But they reckoned without two things: the power of the internet and the hunger of emerging-market companies.

India has long since turned itself into the world’s back-office—subjecting paper-processing hubs such as Kansas City to the same forces of competition that devastated former industrial cities such as Gary, Indiana. Now Indian-based companies are moving into an wider range of services: reading CT-scans and X-rays, processing legal documents and helping with animation. They are also moving into sophisticated niches. TCS and Infosys compete directly with IBM and Accenture in consulting. American companies are adding to the trend by moving more of their important operations to India: John Chambers, Cisco’s boss, has decreed that 20% of the firm’s leadership should be in Bangalore.

Companies in India are challenging American ones in an area that they have long considered their own—innovation. The Boston Consulting Group’s 2010 survey of innovation notes that the number of American companies on its list of top innovators is declining while the number of Indian companies is rising. It also points out that the Indian firms place a higher value on innovation than the American companies.

Most strikingly, Indian companies have produced a new type of innovation, variously dubbed “frugal”, “reverse” and “Gandhian”. The essence is to reduce the price of a product or service by a breathtaking amount—80% rather than 10%—by removing unnecessary bells and whistles. Tata Motors is selling its “people’s car” for $3,000; GE’s Indian arm offers a medical ECG machine for $400; Bharat Biotech sells a single dose of its hepatitis B vaccine for 20 cents and Bharti Airtel provides one of the cheapest wireless telephone services in the world. These frugal products are likely to disrupt established Western companies (including GE itself) by forcing them to engage in a bloody price war.

Luring them back

To add to this general turbulence Indian-based companies are also on a hiring binge. For decades America has gorged itself on a seemingly limitless supply of brilliant Indian PhD students and entrepreneurs. Half of Silicon Valley’s start-ups were either founded or co-founded by Indians. But these paragons are now returning en masse to the mother country (just as America makes life more difficult for immigrants). Why work for a sluggardly American firm when Infosys is growing at double digits? Why live in a flimsy bungalow in the Valley when an Indian company will provide you with a villa in a gated community, membership of a country club and a chauffeur-driven car?

http://www.economist.com/node/17414206?story_id=17414206&CFID=152853871&CFTOKEN=82180811

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Ricardo_Amaral  11/07/2010 03:03 PM Report

“Our Banana Republic”

By Nicholas D. Kristof

Published: November 6, 2010

The New York Times

In my reporting, I regularly travel to banana republics notorious for their inequality. In some of these plutocracies, the richest 1 percent of the population gobbles up 20 percent of the national pie.

But guess what? You no longer need to travel to distant and dangerous countries to observe such rapacious inequality. We now have it right here at home — and in the aftermath of Tuesday’s election, it may get worse.

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

…And if Republicans are worried about long-term budget deficits, a reasonable concern, why are they insistent on two steps that nonpartisan economists say would worsen the deficits by more than $800 billion over a decade — cutting taxes for the most opulent, and repealing health care reform? What other programs would they cut to make up the lost $800 billion in revenue?

You can read the entire article at:

http://www.nytimes.com/2010/11/07/opinion/07kristof.html?_r=1

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JohnGelles  11/07/2010 07:57 AM Report

We are facing the Maggie Thatcher nonsense that THERE IS NO ALTERNATIVE to casino capitalism and the rapid decline in American industry and influence that such anti-system represents. The alternative is constructive development in advance industrial nations of cooperative trade and full employment logistical supply systems in support of economic democracy based on free speech, free thought, human economic and political rights, conflict resolution, and realistic defense of civilization from its enemies foreign and domestic.

In the discussion at hand American vulnerability to internal greed and short-sightedness is reviewed. I am sure it is a serious matter. I do not dismiss or make light of it.

In browsing the net for a moment or two I ran across this item on or through Wikipedia:

On September 29, 2010, the U.S. House of Representatives approved the Rare Earths and Critical Materials Revitalization Act of 2010 (H.R.6160). The approved legislation is aimed at restoring the U.S. as a leading producer of rare earth elements, and would support activities in the U.S. Department of Energy to discover and develop rare earth sites inside of the U.S. in an effort to reduce the auto industry's near-complete dependence on China for the minerals. A similar bill, the Rare Earths Supply Technology and Resources Transformation Act of 2010 (S. 3521), is being discussed in the U.S. Senate.

The item does not establish sufficient action or intention by the USA to stay a leader of the civilized world. But it may represent a small hint of such possibility.

Charlie Rose had better look into Michael Hudson and others from the University of Missouri Kansas City. That locus of critical economic thinking may have more to offer than Harvard, Stamford, MIT and Chicago all together.

I, myself, have something to offer when I say we need to accommodate the dreams of America's middle class to support individuals, firms, institutions, nations and trends, in the pursuit of virtue and scientific breakthroughs. These dreams include success by such giants as the Department of Defense and DARPA as well as of wealthy inventors and entrepreneurs. John Kenneth Galbraith called this PLURALISM. It looks to support our best and condemn our worst. We have made mistakes like tolerating growing evil when we might have strangled it early. There is no substitute for good conduct and vigilance in diplomacy intelligence, and realism. Nor is there any purpose in remaining tolerant of poverty and ignorance that may grow into the internal cancer that cuts the human race off from its own best future.

JohnGelles  11/07/2010 06:59 AM Report

I will read the New Realty as recommended. Meanwhile I have discovered the thoughts of MICHAEL HUDSON who may be on my side to some degree. Here is a URL to some of his recent output on the very current subject of our post 2010 election choices.

http://www.amazon.com/tag/economics/forum/ref=cm_cd_tfp_ef_tft_tp?_encoding=UTF8&cdForum=Fx1K53KZRRAL RH&cdThread=Tx1QLDEV37WZCVY&displayType=tagsDetail

Ricardo_Amaral  11/07/2010 03:07 AM Report

JohnGelles - here is the new reality:

The United States from China's perspective

http://blog.foreignpolicy.com/posts/2010/11/02/our_little_round_eyed_friends_will_buy_anything

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Ricardo_Amaral  11/07/2010 02:55 AM Report

Today the Financial Times (November 6 / 7 2010) had an interesting article on The Lex Column and the article said: “US's missing workers”....pay attention to the labour force participation rate. Only 64.4 per cent of working-age population either has a job or is actively searching for one. The proportion has fallen to the lowest since 1984 (when the job-shy were likely to be homemakers) – and the trend is still down. That is not good.

*****

Even basic common-sense is dead in the United States. For those who still have the illusion that Americans advanced technologies and innovation is going to help the recovery of the US economy in the coming years – here is a reality check:

http://www.bloomberg.com/video/63400346/

How dumb can you get?

The US economy it is sinking just like the Titanic – Here is how Pathetic a former superpower can become in a very short time.

Every place you look at you can see signs of massive decline of the US economy. The Shuttle space program is having its final voyage into space in the coming weeks then NASA is laying-off thousands of high power scientists in Florida, and in California – and keep in mind that NASA has been for a long time one of the symbols of American advanced technology – this NASA implosion it's just another sign of American decline and that the American economic system has become completely obsolete.

If you look around and connect the dots probably you will find 100's of similar examples here in the United States, and the dismantling of NASA it's not an isolated fluke.

I can already picture the US defense secretary calling China and saying: “The US is thinking about having a military confrontation with your country - Please can you send us a new supply of smart bombs to replenish our inventory of smart bombs which is very low right now.

*****

How dumb can you get?

I am talking about the US decision making process: not only in the financial system that lead to a complete economic and financial meltdown, but also regarding the US government....as per above examples.

Can you name another former superpower in world history that got this dumb?

Here is another example:

Afghanistan War: Here is a conversation between two Generals at the Pentagon - We can't bomb the Taliban because we run out of smart bombs.

Please call the Chinese and tell them that we need to replenish our inventory of smart bombs ASAP, and in the meantime we place that war on hold.

Before we change the subject - please also give a call to Israel and let them know that they can't bomb anybody in the Middle East in the near future, because we are not in the position of supplying Israel with more smart bombs.

We could go on and on with this laughable routine until we run out of funny ideas...

*****

Now do you understand why China is financing this massive deficit spending of the United States?

In exchange the United States will manufacture all its critical military armament in China – and as the United States get rid off and layoff scientists with PhD's and high-tech personnel in critical defense facilities in the US – at the same time the Unite States replaces the old high-tech defense facility with a a dog kennel in turn creating jobs with no benefits and Walmart wage levels.

You can get a lower cost in China, and the Chinese are very efficient they are able to fill in any order from the United States - ASAP.

I wonder if the Russians are also getting that dumb and if they are outsourcing their military armament production to China?

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robdverity  11/06/2010 03:25 PM Report

Right on forrest. The corrosively, corrupt system trys to claim the bailout has been all but repaid when the real subprime damage to the ec. in frozen real estate and foreclosures rumbles on. And they continue to reward the perps when they en masse should be incarcerated with Bernie Madoff. Crimes against humanity for damn sure. And they're ALL still free. What a culture.

forrestgump79  11/06/2010 02:55 PM Report

banks are still holding toxic assets on their books... fed is gonna "print" 600 billion of new money and buy corporate debt with it

debt of what corporations, u think, is gonna be bought? right, that of the banks

JohnGelles  11/06/2010 11:05 AM Report

The good news is that all our economic problems can be solved in very short order with a few changes in the way we create money and monetized demand for the over-supply presently keeping us under-employed and overly competitive where we need to be more cooperative as we were in WW II.

The WW II model, vastly upgraded and improved by the INFORMATION SYSTEM TOOLS developed in recent decades, are ready to let the contracts, invest the capital, make the loans, fast-train the workers, etc., to make the President's pledge yesterday come to life immediately:

HE SAID OUR SOCIETAL JOB WILL NOT BE DONE UNTIL EVERY AMERICAN WHO WANTS A GOOD JOB HAS ONE.

These jobs will be mostly in an innovative fully funded private sector protected from slowdown by government strategic help to capitalize on our opportunities in a still more efficient INFO-TECH revolution and the parallel revolutions in BIO-TECH, NANO-TECH, AUTOMATION, CLEAN ENERGY, FRIENDLY LEARNING SYSTEMS MODELED ON SPORTS AND GAMES AND DELIVERED FROM OUR INSTITUTES OF TECHNOLOGY INTO EVERY ROOM IN YOUR HOUSE.

Out opportunities include massive increases in housing to endless homelessness and joblessness and turn the carbon we stop burning into the most useful structural material man has ever imagined. So the learning systems above that reach every room will find our children ready to learn what we never learned and do what we need to do from the cradle to the grave.

Brain-washed to fail is where too many are. Made dependent on nonsense that evolved before the miracles at hand today made poverty moronic as well as evil, made unemployment unacceptable as well as disgusting, and made all your pessimism a disease we don't need that is passing.

Ricardo_Amaral  11/06/2010 08:05 AM Report

In a Nutshell:

The US economy had a complete meltdown and collapsed in 2008. And since that time the US economy has been on intensive care, the patient still is in a coma, and have been kept alive by massive US government intervention, massive US government guarantees, by major Wall Street bailouts, by fudging the books with accounting shenanigans - and the new economic recovery is based on a lot of wishful thinking, and also on the economy that does not exist anymore including all the pieces of Wall Street that went out of business, the thousands of auto dealerships and automobile plants that closed down - and now the Republicans are expecting that all these businesses that don't exist anymore are going to come back from the dead, and they will start hiring people again to help with the economic recovery here in the United States.

The US economy is finish - the US economic system is in a lot worse shape than most people realized.

I live in New Jersey where the new Republican governor cut the New Jersey state budget by 33 percent and he is causing a major implosion in the economy of New Jersey (he did cut the state budget by US$ 11 billion dollars which becomes even worse when you consider the multiplier effect.)

The bread and butter of the New Jersey economy used to be the back office for Wall Street companies, and it's also a major center for the pharmaceutical industry. These pharmaceutical companies are merging and eliminating thousands of jobs or they are moving to another state where they can cut costs and survive in the coming years.

The US economy is in critical condition with very high unemployment, which is going to get worse in the coming years - the truth is the US economy is spinning completely out of control and imploding.

The human capital (the well educated people with higher levels of education) is leaving the United States at an alarming rate and going to places where there's some kind of future for them such as Brazil, India, China, and so on...(In 2008 alone 100,000 Indians went to India and this new generation who are leaving the country are made up of a very well educated people with PhD's and other science degrees these are the guys who start the high-tech companies in Silicon Valley and in other parts of the USA. The reason they are leaving the US and going to India, it's because they think the future is going to be created there and not in the United States.)

The mainstream media here in the United States never say a word on this subject, but in the last 3 years the United States had reverse illegal immigration - that means that there are more illegal immigrants leaving the United States than illegal immigrants coming in - the net loss of illegal immigrants has been around 2 million people during that period – and you can see what is happening with this reverse illegal immigration not only by the exodus that has been happening around the communities where these illegal immigrants used to live, but also in the large decline of the amount of money that these illegal immigrants used to send home to help their families.

This trend of reverse immigration has not happened in the United States in a long time probably in over 100 years. These reverse illegal immigration is the “canary in the coal mine” and represents a major alert signal to the implosion that is happening inside the US economy, since these illegal immigrants are the type of people who would take any type of job to survive and to help their families.

As I mentioned to you the US economy can't create jobs and the real unemployment rate is much higher than the official figures.

But today, the political landscape is changing for the worse in the United States with today's election - with the major political parties splitting the US Congress and at this critical turning point in US history the current president of the United States will not be able to do anything in the next 2 years. We are going to have a complete paralysis in Washington at a time when what is left of the US economy is imploding, self-destructing, and in critical condition.

There are other trends that will make things even worse for the US economy such as: in most states in the United States their finances are in terrible shape and in 2011, and 2012 many governors around the United States are going to bite the bullet, and they are going to do the same thing that the New Jersey governor did in New Jersey, and they are going to cut the budget of all these states around the United States to the bone laying-off millions of people around the country. They are going to cut all kinds of people's pensions and so on, as never seen before in US history.

And don't forget that at a time of this major economic decline the baby boomers are going to put even more pressure on the system, since for now on every year the US government has to carry about an extra 3 million people, and pay the costs related to Social Security, Medicare, Medicaid, and so on. The number of people depending on these government entitlements is growing very fast from 40 million people to 72 million people in a very short period of time.

Every place you look you can see signs of massive decline of the US economy. The Shuttle space program is having its final voyage into space in the coming weeks then NASA is laying-off thousands of high power scientists in Florida, and in California – and keep in mind that NASA has been for a long time one of the symbols of American advanced technology – this NASA implosion it's just another sign of American decline and that the American economic system has become completely obsolete.

It's just a coincidence that we had an election in Brazil a few days ago which turned out to be a great result for Brazil regarding the coming years, and today we are having an election here in the United States and the result of this election represents the last nail on the coffin of the US economy.

Today I realized the United States economy has reached the end of the line, and now it's just a matter of time for the rest of the world to arrive to the same conclusion.

The implosion of the economy of declining empires happen much faster today than in the past - today it happens at the speed of light.

On top of all that we had the millions of jobs lost to new technology – there are more jobs that got replaced by new technology than people realized – and these jobs will never return to the US economy.

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doodah  11/06/2010 07:57 AM Report

I beg your pardon, JG, ME? Brain-Washed?! I think not. And I might add, your 'comprehensive originality' could parallel, El Ron Hubbard's 'genius'. You wouldn't happen to be a Californian? would ya? . And I've known several WWII veterans in my life, and NONE of them sound like you. ;).. you must have been brain-washed by one of those nutty hippys back in the 60s. I've known a few of them myself, they used to hang out at the barber shop, 50-70 year old men wearing bandannas and smokin reefer and telling the most outrageous stories. :)

Btw folks, the Federal Reserve does NOT print money (that part of the equation is always kept a secret). The Federal Reserve BUYS and SELLS money (in the form of air). So when they talk about bubbles, they literally mean 'BUBBLES'

JohnGelles  11/06/2010 01:43 AM Report

We have the same or greater global capacity to produce all the needs and jobs we had before the current jobless recession.

Is there any real excuse for failing to produce in fact the goods and services and the jobs and wages necessary to end the recession overnight?

I mean a real excuse that would convince visitors from a logical place in space (not already brain-washed as all the commentators here and at Charlie Rose's famous table are?)

You all make me sick. Spouting off about the facts that we are doomed when we are not doomed at all. We are merely stupid.

The most important action America needs to take is to repeal the whole income tax code. In its place we need money printed by our central bank (YES, QUANTITATIVE EASING IS THE SAME AS PRINTING MONEY) to pay all costs of government supplemented by transaction taxes at points of sale only to discourage and prevent hyperinflation.

If we need more than such taxes, we will still never need wealth or income taxes. They make no sense at any time. People who are not rich cannot afford to pay them. People who are rich cannot cause hyperinflation of ordinary prices because they do not buy ordinary items. We may need to contract for production to be subsidized by government. This would keep supply at or above need. We may also have to subsidize wages to keep demand as high as necessary.

We use a monetary system of production here and all around the Earth. It needs reform and conformance to logistical systems for the supply of essential goods and services. Such reforms are nowhere near as difficult to design and implement as are the heart bypass operations done today by thousands of doctors no smarter than economists. The difference is that economists are allowed to ask the "market" to do their job. They should all be sent back to school to learn to be logistical supply engineers.

robdverity  11/05/2010 04:08 PM Report

Price of oil toward $90; gold toward $1,400. Quantitative toughening (or easing my ass).

More grease for the banks instead of prison where they belong.

come2gether  11/05/2010 03:13 PM Report

China wants the US to change the quantitative easing stance. Going so far as to say the US is a planned economy.

doodah  11/05/2010 09:12 AM Report

Corruptionism

doodah  11/05/2010 09:02 AM Report

@ nadams,

Spot on. That's the ONE SIDE of the coin that the republicans (so-called conservatives) would ONLY like to look at (it's the druggies (users/abusers) fault. NOT the dope dealers/pushers fault). As long as one side of the coin is being protected, by default, both sides have to be protected. .. Talk about 'protectionism'. sure stinks like 'corruption'. . . . hey! Did i just create a new rap song?. :)

If we are to get serious about drugs.?. Go after the PUSHERS (Lobbyists) first (it's called nipping it in the bud). But they won't do that; and so we're in the quagmire we're in with nothing but a viscous circle for an end in sight (why not, it's paying somebody's bills). .Thanks for everything Tea Party folks, don't let the screen door hit you in the ...

nadams  11/05/2010 05:17 AM Report

A very informative interview about the current state of the economy. However, there is an aspect of the housing crisis that no one is talking about. There are many people upside down in their mortgages and some, if not many, deserve some compassion and sympathy. But I remember taking a look around me in 2006 and wondering what the hell was going on. Many people I knew, either as neighbors, friends or as clients, seemed to have an excess of wealth. I knew what they did for a living, could guess fairly accurately about how much money they made, and this made me marvel at their ability to drive expensive cars, live in luxurious homes, take great vacations, wear great clothes and accessories. On top of that, I knew many people in big real estate markets like Southern California who were refinancing their homes every couple of years against the rising market values and taking many tens of thousands of dollars out for personal use. I admit, I was jealous. But it didn't seem right.

Now many of these same people are upside down in their mortgages. Many still live in their really nice homes, but have not paid any money on their mortgages in over a year. And instead of living a more austere lifestyle, they are still taking vacations and buying personal items because they don't have to pay their mortgage!

This country has a serious problem with a culture of excess and people who expect and demand their "stuff" as some kind of god-given right. The lenders were like drug dealers and the borrowers were like heroin addicts. Still are. This is why I am leery of the Fed solution of printing more money and this is why I am leery of proposal to write down the mortgages. There is simply too much partying going on with no responsibility for the consequences of actions. Until we get this figured out the "recovery" will be comatose.

CarolJ  11/04/2010 08:28 PM Report

Forrestgump79 read "Abigail Adams" by Woody Holton and learn about US Printing practices when it comes to money. Naughty, naughty.

Also Charlie some one commented the other day that you were wearing a red tie, it looked great wear red ties, shirts etc. Also this program with Berner and Stiglich, did all 3 of you decide to purchase the same tie? Also R E Mant, I will let to speal your rhetoric. Charlie's shows are never boring but many times over my head.

forrestgump79  11/04/2010 06:04 PM Report

I wish they found more time for Stiglitz deep insights. It was really interesting to listen.

Can someone tell me if the following is true:

"Quantitative easing = Printing money"

"We are printing money, because we are up to the neck in debt but still need to find a way to make investments"

"Printing money will cause devaluation of dollar and inflation"

Thank you!

anne4444  11/04/2010 02:36 PM Report

The power of persuasion…

I wish I could have this talent.

doodah  11/04/2010 12:59 PM Report

Stiglitz and Berner seem to know where to direct their focus. The financial professionals really did the economy in. It's at least a bit comforting to know that at least a couple of them are actually smart enough to recognize it and can be honest about it. ..so they wouldn't be useful politically.? <nudge nudge> Tea Party.? .. oh yeah, I almost forgot, it's 'Honk if you Hate Obama' bumper sticker week. THAT should fix everything for now.

REMant  11/04/2010 12:27 PM Report

This discussion was, I think, better than most and more perceptive than the kind of thing we heard for the most part two years ago. The inflation argument has been made by Wall St seemingly forever, because it's good for them, if no one else. Asset price inflation will help increase the price of stocks and the real estate they hold, but it is likely that at the same time it will decrease the general public's ability to purchase them, even if it increases consumer spending based on the asset inflation - the pyramid scheme the Fed has long been running. On the other hand writing down the mortgages is something I've advocated since day one, but will hurt the banks and their investors. Moreover, buying up Treasuries helps finance the govt spending the tea party and monetarists abhor, and gives the financial institutions funds to invest overseas where returns are better. A depreciating currency will certainly exacerbate trade issues as the IMF and Euros have warned, but when has the Fed ever been concerned about that?

To the Keynesian/monetarist mind a recession is a failure of credit, not the result of an increase in productivity deflating an overextension of credit. That is why the Fed was created, with the idea that it would resolve traditional October credit crunches by simply issuing more. But it became the idea that credit was unlimited, and further that it was the driving force of an economy rather than productivity gains. It assumes actually that automation is the villain, increasing unemployment, and so prices must be kept stable, requiring a certain amount of inflation or increase in money supply. You will note that the Fed's mandate is to maintain stable prices and stable employment, which leads directly to Phillips' curve. Despite acknowledging that it is created out of whole cloth, the Fed expects the money to be taken at face value, the same mistake made by the Bank of England in the Napoleonic Wars, and by Louis XIV's bankers a century earlier. It has become a self-fulfilling prophecy, because as, in fact, ppl are thrown out of work by the operation of the system, the need for productivity gains becomes all the more imperative, resulting in a malaise termed in the 1970's, stagflation. A bank-led economy then looks overseas for cheaper labor and commodities. The government becomes involved to prevent unrest and to show the private sector how it should be done. But neither of these can change the basic equation. When a crisis point is reached the banks move to save themselves, thinking, unfortunately rightly, that they are central to the economy, which, of course, is a gigantic pyramid scheme. The Keynesians and monetarists, of course, call for more credit to keep people employed. This they euphemistically call insurance and/or stimulus. But it is clearly self-destructive, the debt ever heavier, unemployment increasing, productivity decreasing, the cost borne by the little guy.

So Bernanke today, blaming the "crisis" on a deus ex machina in the very first sentence. Then arguing that despite having stopped "free fall" and "setting the stage" for recovery, there has not been enough progress. He then goes so far as to convert the Fed's mandate for price stability, into one for "low, stable inflation." This he alleges, is "inconsistent" with healthy economic growth, because it can "morph" into "deflation (falling prices and wages), which can contribute to long periods of economic stagnation." In other words, unless we have inflation we will not have economic "growth" and hence unemployment, i.e., the Phillips curve. Deflation must mean an excess of "capacity" in his view, rather than an insufficiency of need for the products it is capable of producing. "This approach," he writes, "eased financial conditions in the past and so, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate" it. In other words, people holding money threw in with the banks' pyramid scheme. But he continues, "easier financial conditions" i.e., more credit, "will make housing more affordable" which will help the banks and allow consumers to borrow and spend on the strength of the escalating price of their property, the situation that brought about the economic collapse, which he calls boosting "confidence." Worse he calls this a "virtuous circle." I would call it a Ponzi scheme. He says that the critics are wrong to worry about inflation as it didn't occur the first time, which begs the question, how can it be said to have had any effect at all?