/* */

Tuesday, November 25, 2008

Stimulus Abacus

As Obama holds more press conferences, we may be able to adjust and clarify our predictions. We know that he wants to have a stimulus package for roads, bridges, and other infrastructure. There have been reports that he may delay tax hikes for the rich. His new appointments for the Office of Management and Budget indicate that they will look for spending cuts as part of "smart government."

I doubt that the spending cuts will be enough to match the stimulus and the tax cuts. The result might be inflationary, but not necessarily. "Web of Debt" says that the government can create money to expand the economy, as long as it doesn’t exceed the value of the work being produced. However, "Web of Debt" does not believe that the newly-created money should come with interest owed to private bankers.

Since Obama is appointing people from Clinton’s team, and we know that Clinton never opposed the Private Banking Cartel, I think it’s safe to say that interest will be owed to private bankers. In other words, there will be more deficit spending. We know that the Fed has the power to create money out of thin air. As I see it, the government will owe money to the banks, and yet the banks are in need of bailouts! (By the way, the recent hearings have shown that bankers are much more powerful than carmakers.) The Obama team may try a mixture of overt and covert money creation, as it is believed has been done in the past. "Web of Debt" tells us that the Fed has been secretly bailing out some banks for several years now.

I like the idea of a stimulus package and I dislike a delay in tax hikes for the rich. I predict that Obama will do a balancing act between the working people and the rich people. If the rich people keep their tax cuts and get to continue collecting interest on the debt, then I imagine they will continue to pocket obscene amounts of money. What will they spend it on? Will they wreak havoc? Could they spark inflation? Maybe Obama will agree to give them as much as they want if they agree not to spend it. It might even be possible that the bankers are overextended in such a way that they need to loosen their grip on power. But I doubt it. I think it will be a difficult balancing act for Obama.

And then there’s the Chinese government’s claim that the new Guns N’ Roses CD is part of a U.S. plan to take over the world. What the heck?


Post a Comment

<< Home