[Pen-l] From Free Market Fundamentalism to State Capitalism

["Charles Brown" <charlesb@xxxxxxxxxxxxxxxxxxxxx>]

Full: _http://henryckliu.com/page172.html_ 
(http://henryckliu.com/page172.html) 

>From Free Market Fundamentalism to State Capitalism  

Part II: Treasuryâs âTroubled Assets Relief Programâ in Trouble 

 
By now, it is becoming clear that government policy has been mostly
focused  
on maintaining asset price at levels that the market has rejected.
Logic  
suggests that such a policy will result in hyperinflation at the end of
the day  
that will lead to more bankruptcies down the road in a protracted
downward  
spiral. The governmentâs attempt to save overextended financial
institutions may  
well cause the total destruction of market capitalism. And if past
experience 
is  any guide, unless wage income is indexed to inflation, the dilution
of 
asset  value through inflation will only hasten the arrival of total
market 
failure and  a total melt down of the market economy. 

So far, not much is  heard from official circles that suggest the
solution to 
the current credit  crisis can only come from an immediate and
substantial 
rise in wage income.  Instead of bailing out insolvent financial
institutions, 
the government should  use sovereign credit to maintain full employment
and 
boost wage income to catch  up with inflated asset prices. If the Fed
must print 
new money to save the  system, the new money should go to job creation
and 
wage increases rather than  to recapitalize insolvent corporations. 
Full 
employment and rising wages  will halt the fall of asset prices with a
rising floor. 

The  approach adopted by the Bush administration is not designed to
rescue a  
collapsing global economy from total meltdown but to resurrect free
market  
capitalism from ideological bankruptcy with state capitalism. 
October 26,  2008 



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