Waiting for the Consumer Rescue

["John Gelles" <indexed-savings@xxxxxxxxxxxxx>]

            Waiting for the Consumer Rescue

If we follow American punditry, we are waiting for
higher consumer spending to rescue our nation (and
all but a few rich small nations) from too little
government spending on desperately needed
environmental and social programs- including
programs to rebuild poor and ravished places and
bring peace.

The pundits tacitly accept the rule that government
spending, itself, should NOT drive consumer
spending- because that was the socialist way and
it failed to deliver the peace or even the goods.

There are a very few in this audience of economists
and scholars who insist the pundits have the cart
before  the horse- who insist that capitalism
prospers best when government spending does in
fact drive both investment and consumer spending.

Why is there not a better consensus on the need for
capitalist nations to spend into circulation money
enough for peace and full employment?

Why the insistence on government debt and
voluntary debt in the private sector before nations
act to prevent hard times and worse?

Why not look instead for voluntary private savings
and government acceptance of the role of central
banker in the capitalist governance structure?

Most of those here who prefer the status quo
are convinced that redistribution of consumption
downward from the middle class to the poor, via
a system of tough taxation, is the missing element
in capitalism. They imagine the redistribution will
also take from the rich and will implement their
slogan of taxation based on the ability to pay.

They fail to remember that just as the elites of
socialist nations never managed to conquer their
insatiable greed for power, the elites of capitalist
nations never manage to conquer their insatiable
greed for wealth and power.

If we would put the horse in front of the cart-
to pull the world out of the mess it is in- to
stimulate government spending free of debt
and interest (tied to inadequate and uncertain
growth)- then we must finesse all visible
taxes and manage money for effect.

WW II spending of central bank dollars bought
the arsenal of democracy. The CB at the time
collected paper bonds in its vault- but those
bonds were interest free to Uncle Sam. Can
we not agree that this is the way to go now and
forever after?

You say that accumulated tax free savings by the
masses below the top will never stay put- that
they will be emptied out and burst on the market
to hyperinflate price as they destroy the value of
money. You say only the very rich have the
temperament to accumulate. That the rest deserve
wage slavery; and the public sector deserves to rot.

Come now. Socialism failed. Taxation is failing.

But there are reasons. It is time to return to
interest-free central bank financing of strategic
government programs. With information
technology and determination we will re-
educate the middle class to save- and when
they are rich to match their spending to what
can be produced- and nothing more.

John Gelles


private sector