[PEN-L:28204] Re: summary of credit bubble

[joanna bujes <joanna.bujes@xxxxxxxxxxxx>]

> The author of the summary of the
> credit bubble seems to be pushing some kind of _laissez-faire_ solution:
> if the Fed had followed a monetary rule or if the US dollar was
> straight-jacketed to gold, then we wouldn't have seen the credit bubble
> of the 1990s and the implosion of 2001 and after. So "we" (the
> Fed) shouldn't have prevented (say) the spread effects of the collapse of
> LTCM; so a recession would have happened in 1997 or so. According to the
> free-market gospel which the author seems to adhere to, market forces
> would have led to relatively rapid recovery. But since we didn't follow
> that policy, recovery will take a long time. The hangover from the binge
> requires that we check into the Betty Ford clinic. The author seems to be
> leaning toward using this to bring in more _laissez-faire_
> "reforms," though that's hardly explicit. 
>
> I think that this story ignores the basic roots of the
> crisis in the US, i.e., the world-wide stagnation of wages (so that
> consumption booms are financed on credit). I'll leave it at a very
> abstract level because I have to go...

Yes, I agree with you. I posted the summary partly because I was
interested in knowing whether the significance of the data was what he
claimed....and partly because I thought it was as good a starting point
as any for a discussion of current economic conditions. Many people, on
this list as well as LBO, have dismissed my "capitalism is
theft" thesis as hopelessly naive; but, I come back to it, because
Capitalism IS (institutionlized/systemic) theft: it just takes various
forms at various times during its repeating cycles. Theft includes taking
away the means of production, liquidating the wealth of some through
expansion of credit, monopolizing and destroying basic resources (air,
water, land) through "privatization" (another name for theft),
war, etc. 

Obviously, you can't reform or improve theft.

Joanna