|
Extract from NY Times article, March 30, 2003, Another
War, Same General, by EDMUND L.
ANDREWS:
"... But Mr. Greenspan and other Fed officials insist that
even if the overnight Fed funds rate is zero, they still have tools to
stimulate the economy. They would do so by buying up longer-term Treasury
securities, such as two-year or five-year or even 10-year securities. By
paying cash for such securities, the Fed would essentially be pumping
money into the economy and pushing long-term interest rates even lower
than they already are.
"Lyle Gramley, a former Fed governor who is now
a senior economic adviser with Schwab Capital Markets, said that
the Fed could push 30-year mortgage rates as
low as 2.5 percent."
As optimistic as I am for success
of the President's long term military and political strategies, that's how
pessimistic my friend B. is about global economic trends, especially the
deindustrialization of America.
The path to reindustrialization here-- and
prosperity everywhere-- (without turning the USA into a naught but
services provider), that I have long seen coming, requires
spending and lending money by Congress directly into circulation-- without
issuing bonds or taxing economic profit.
Now there is another path. The central bank can
do some of the job by lending money into circulation well ahead
of hard collateralization of the loans.
The disadvantage of the second path is that it
forces the system to respond to profit potentials more-- and labor and
environmental standards, less.
In the long run, the second path is vulnerable to
consumer addiction and gluttony and corporate corruption more than a sane
nation would want.
But it is a better and safer path than the one
we took at the time of the Great Depression.
In the short term, we may have to settle for protection from economic
contraction. In the long term we must move as fast as we can toward the
satisfaction of common sense environmental and democratic objectives.
This means spending
legislated money into circulation and taxing
nothing but that which responsible nations and
authorities must discourage-- like smoking, inflationary pricing,
and hoarding assets (including skills and intellectual property) that
ought to be widely employed to accomplish civilized
priorities.
John
Gelles http://www.tiea.usInflation protected savings should
replace
taxes so that public needs
are met, a minimum
union wage
prevails and nobody is out of work
|