[Peace-discuss] progressive economists on the Fed's QE2 and the Catfood Commission

Tue Nov 16 13:10:21 CST 2010

There are disagreements among liberal, "progressive," and leftist economicst re 
QE2. Some see it as sound monetary policy, in absence of fiscal stimulus, both 
in lessening the cost of the debt and lowering the value of the dollar. Others, 
like Michael Hudson and Mike Whitney on Counterpunch, see it as a kind of 
economic aggression against other countries (mainly China), and as a bonanza for 
Wall Street currency speculators, who will take the money, invest it in foreign 
currencies, and watch the value of their investment increase--easy money, just 
like the easy money that was made off the bailout. People that I respect, like 
Weisbrot and Baker, haven't addressed Hudson's criticism, and haven't clearly 
explained how QE2 will make anything better, as opposed to keeping things from 
getting worse. It would be important and edifying to hear them address these 
criticisms of QE2. But of course they do understand that the possible benefits 
of QE2 are undermined by the lack of a stimulus.

DG

________________________________
From: Robert Naiman <naiman.uiuc at gmail.com>
To: Peace-discuss <peace-discuss at anti-war.net>
Sent: Tue, November 16, 2010 12:06:04 PM
Subject: [Peace-discuss] progressive economists on the Fed's QE2 and the Catfood 
Commission

Mark Weisbrot: Fed's QE2 is the only good thing going, and Europe
should be emulating the Fed, not destroying Greece, Spain, Ireland and
Portugal with austerity:
http://www.guardian.co.uk/commentisfree/cifamerica/2010/nov/12/g20-summit-currency-wars

Dean Baker: Aqua Buddha and the Number 21
Dean Baker calls out Alan Simpson and Erskine Bowles, co-chairs of
Obama's deficit commission, for their unexamined attachment to the
dogma that government spending should be capped at 21% of GDP.
http://www.truth-out.org/aqua-buddha-and-number-2165125

-- 
Robert Naiman
Policy Director
Just Foreign Policy
www.justforeignpolicy.org
naiman at justforeignpolicy.org

Urge Congress to Support a Timetable for Military Withdrawal from Afghanistan
http://www.justforeignpolicy.org/act/feingold-mcgovern

g going, and Europe should be emulating the Fed:

G-20 Barking Up the Wrong Tree: Bad Macroeconomic Policies, Especially
in the High Income Countries, Are the Main Threat to World Economic
Recovery
http://www.guardian.co.uk/commentisfree/cifamerica/2010/nov/12/g20-summit-currency-wars

On Tue, Nov 16, 2010 at 11:36 AM, Morton K. Brussel
<brussel at illinois.edu> wrote:
> Wayne, I thought you would enjoy this remarkable video:
> http://www.youtube.com/watch?v=PTUY16CkS-k&feature=share
> Others may too.
> --mkb
>
>
> On Nov 16, 2010, at 8:11 AM, E. Wayne Johnson wrote:
>
> "...there was an uncommon flash of common sense in Washington last week. A
> special bipartisan presidential panel on reducing the national deficit
> proposed $4 trillion in federal spending cuts.
> All political sacred cows were targeted. The biggest: the monstrous $700
> billion military budget. A third of US worldwide military bases would close.
> There would be cuts to social security, mortgage deductions, delays in
> retirement age, an end to politician’s local pet projects. Taxes would
> rise.  The howling has already begun. Unfortunately, such unpopular, drastic
> spending cuts seem highly unlikely, particularly in the new US Congress
> where Republicans and Democrats will be deadlocked. America would need an
> economic dictator to implement the panel’s full plan.
>
> China has one – the Communist Party. America does not and is rudderless.
> More empires have been undone by financial collapse than invasion or
> battlefield defeats. The once mighty United States is staggering in this
> direction. "
>
>
> China Scorns US Funny-Money
>
> by Eric Margolis
> http://www.lewrockwell.com/margolis/margolis214.html
>
>
> One day, the emperor of ancient Babylon summoned his treasury overseer and
> exclaimed, "I need more money to wage war on those filthy Hittite
> terrorists!
>
> "But I looked in my great treasure chest and it’s nearly empty. There are
> hardly any gold coins left," he thundered.
>
> "Oh Light of the Euphrates," groveled his terrified minister, "we are out of
> gold. Your wars have become too expensive."
>
> "But I have a solution, your celestial greatness. We will quietly trim the
> amount of gold in our imperial gold coins to make them go further. No one
> will notice."
>
> Fast forward to Washington, 2010. It’s no longer called "clipping coins."
> Today, the name for debauching a nation’s currency is called "quantitative
> easing(QE)," but it’s still the same old fraud committed by financial
> flim-flam men.
>
> Washington is flooding financial markets with $600 billion of worthless
> dollars, hoping a rising tide of Monopoly money will somehow lift America
> out of recession. The Fed’s first QE effort was a fizzle. Welcome to QE2. In
> high finance, hope springs eternal.
>
> The US government is stoking worldwide inflation in order to lower its
> outstanding debt by repaying creditors with depreciated dollars. The rest of
> the world is boiling angry at Washington.
>
> Just before last week’s G20 economic summit in South Korea, China’s state
> credit agency publicly downgraded America’s credit rating and questioned US
> leadership of the world’s economy.
>
> In an unprecedented, stinging rebuke, China scolded Washington for
> "deteriorating debt repayment capability," and predicted quantitative easing
> would lead to "fundamentally lowering the national solvency."
>
> This was a real slap in the face heard around the globe – particularly
> coming from a bunch of commies! China is the largest holder of US government
> debt.
>
> I remember the day when my father, a New York financier, used to sneer at
> iffy stock or bond issues as, "Chinese paper." Now, it’s "American paper."
> How the world has turned.
>
> Washington has been blasting China for manipulating its currency to keep the
> value low – which is quite true. Embarrassingly, Germany and Brazil just
> accused the US of being as big a currency manipulator as China – which is
> also quite true. The EU refused to join the US in alone blaming China for
> world financial and currency instability.
>
> A depreciated dollar boosts US exports and hurts nations exporting to the
> US. Economists call it, "beggar thy neighbor," a destructive trade practice
> that played a key role in the 1930’s world depression.
>
> This money flood is eroding the value of the dollar, the world’s premier
> medium of exchange. In the past two months, the US dollar has dropped 6%
> against other major currencies. Frightened investors are piling into gold,
> now up 17% in 60 days.
>
> The Obama administration, just "shellacked" by voters in mid-term elections,
> and desperate to lower unemployment, is gambling more debt shock therapy
> will spark the economy back to life. But massive, unsustainable debt caused
> the US financial meltdown in 2008.
>
> The US public debt has hit a stratospheric $14 trillion. You don’t treat a
> poisoning victim with more poison. Spending one’s way to prosperity with
> borrowed money is a dangerous chimera.
>
> But panicky politicians are ready to try any sort of economic snake oil
> remedy to save their skins. Before 2007, America was living high on phony
> financial froth. Finance had become America’s leading business. Those days
> are over but no one dares to tell the voters.
>
> Besides destabilizing world exchange rates and trade, Washington’s money
> flood is pouring into emerging markets as American investors seek higher
> returns than the miserable pittance available at home, creating highly
> volatile capital flows.
>
> The so-called financial rescue package brought in by Presidents Bush and
> Obama have been a bonanza for Wall Street and the banks, and a catastrophe
> for savers and ordinary citizens.
>
> During the 1980’s, we saw fragile Asian economies battered as investment
> from the US flooded in, then out. This is happening again, boosting
> currencies of many nations, making their exports uncompetitive. Investments
> barriers are going up from China to Brazil.
>
> President Barack Obama inherited a horrible mess from the Bush
> administration. However, his wrongheaded economic response is undermining
> the world’s economic order. A nation’s currency is more a symbol of its
> strength and good name than its flag. Running down the US dollar, which
> ruled world finance since 1945, could mark the beginning of the end of the
> American era.
>
> That’s what the American delegation to the G20 economic summit in Seoul,
> South Korea and Yokohama, Japan, heard last weekend. Obama’s economic
> policies, notably his attempts to stimulate the US economic with the
> steroids of more deficit spending, were roundly rejected and criticized by
> other G20 members. No decisions were reached on exchange rates.
>
> However, there was an uncommon flash of common sense in Washington last
> week. A special bipartisan presidential panel on reducing the national
> deficit proposed $4 trillion in federal spending cuts.
>
> All political sacred cows were targeted. The biggest: the monstrous $700
> billion military budget. A third of US worldwide military bases would close.
> There would be cuts to social security, mortgage deductions, delays in
> retirement age, an end to politician’s local pet projects. Taxes would rise.
>
> The howling has already begun. Unfortunately, such unpopular, drastic
> spending cuts seem highly unlikely, particularly in the new US Congress
> where Republicans and Democrats will be deadlocked. America would need an
> economic dictator to implement the panel’s full plan.
>
> China has one – the Communist Party. America does not and is rudderless.
> More empires have been undone by financial collapse than invasion or
> battlefield defeats. The once mighty United States is staggering in this
> direction.
>
> November 16, 2010
> _______________________________________________
> Peace-discuss mailing list
> Peace-discuss at lists.chambana.net
> http://lists.chambana.net/mailman/listinfo/peace-discuss
>
>
> _______________________________________________
> Peace-discuss mailing list
> Peace-discuss at lists.chambana.net
> http://lists.chambana.net/mailman/listinfo/peace-discuss
>
>

-- 
Robert Naiman
Policy Director
Just Foreign Policy
www.justforeignpolicy.org
naiman at justforeignpolicy.org

Urge Congress to Support a Timetable for Military Withdrawal from Afghanistan
http://www.justforeignpolicy.org/act/feingold-mcgovern
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