Ben Bernanke, chairman of the Federal Reserve, was on the “60 Minutes” teevee show last night, explaining why the Fed is spending $600 billion to buy U.S. debt, an untried strategy he hopes will prevent deflation – falling prices and wages like Japan experienced in its “lost decade” of the ’90s, and the U.S. went through as the 1929 stock market crash deepened into the Great Depression.
Economies spiral up and they spiral down; growth that’s too fast means that prices keep rising while wages don’t keep up. That’s called inflation and it’s bad, because a worker’s dollar doesn’t buy what it used to. Growth that’s slow or non-existent puts pressure on prices, including labor; employers cut paychecks, and even though a loaf of bread might turn a few cents cheaper, workers have less money to buy bread. That’s called deflation and it’s every bit as bad.
Steady growth that balances out prices and wages is the ideal, and that’s what Bernanke and the Fed are trying to achieve. However, his TV interview indicates this is a very tricky time for the world economy. Fed chiefs never go on TV; the last guy, Alan Greenspan, perfected the low art of using long words to say absolutely nothing in public. He didn’t have to; he was the chairman of the Federal Reserve, one of the most powerful men in the world.
So Bernanke’s appearance was fairly remarkable – less because of his immediate message about the $600 billion ploy, than because he also had to answer other questions from his interviewer, Scott Pelley of CBS News.
• Unemployment is going to stay sky-high for years. (This cannot be good news for President Obama’s re-election plans.)
• The recent recession is over according to the economists, but another one, a double-dipper, can’t be ruled out.
• Education is key to an individual worker’s employment prospects; college grads have a 5% unemployment rate, while high school graduates are twice as likely to be unemployed. (Meanwhile states are cutting education funding and school districts nationwide are laying off teachers.)
• The Federal government’s budget deficit must be brought down – but not this year while so many people are suffering and deflation is the real scare.
Pelley couldn’t get Bernanke to condemn the Republican plan to extend the Bush tax cuts for millionaires – but the Fed chief did sound a mild alarm about the destruction of the middle class. To me, that was the most important part of the interview.
Excerpt from The New York Times:
When asked about rising inequality in the United States, Mr. Bernanke offered a response that was likely to be embraced by liberals.
“It’s a very bad development,” he said. “It’s creating two societies.”
One rich, one poor.
The Times chose to couch this inappropriately, in my view, as a call for revamping U.S. tax policy to eliminate what Bernanke called “inefficiency” (and the rest of us know as deductions, tax breaks, subsidies and giveaways), so that overall rates can be lowered and more money can be raised. The Times’ analysis is Beltway-speak, as Bernanke appeared to endorse parts of the regressive platform of Obama’s own Blue Ribbon Panel in Charge of Screwing Americans, featuring such winning proposals as raising the retirement age Till You’re Dead.
It’s entirely possible to eliminate the deficit without screwing the middle class, but you’ll never hear that out of a Blue Ribbon Panel, because rational solutions don’t conform to the current media blare.
Still, Bernanke went on about the widening gap between rich and poor, now the largest inequality in the developed world and the worst in U.S. history:
Mr. Bernanke added: “It leads to an unequal society, and a society which doesn’t have the cohesion that we’d like to see.”
That to me is the point; we’re losing our middle class, and even the Fed chairman knows that’s a grave danger to America and the entire world.
So sort the wheat from the chaff; I wouldn’t give you a copper penny for the Simpson-Bowles blue ribboneering, for Beltway obsessions or faulty Villager-speak. The chairman of the Federal Reserve has admitted we’re destroying our country.
And we’re doing it under Barack Obama just as we did under George W. Bush. The incompetence of the Current Occupant is astonishing to me; I’m sorry I ever promoted him, but that’s water under the bridge now. What shall we do? Where do we go from here?
It leads to an unequal society.
I’d happily blame all the usual suspects, not just Obama but McConnell, Murdoch and Limbaugh, if not for the fact that both parties and a majority of voters have arranged all this exactly to their liking.
We’re now governed by the same corporations whose TV commercials we lap up like dogs at the feed trough.
The USA is no longer a democracy, it’s a plutocracy. The Fortune 500 runs everything, having bought the entire Congress.
And why not? It was there for the plucking, since Americans decided 30 years ago (shortly after the Watergate scandal) that we wouldn’t be caught dead financing political campaigns with tax dollars.
Who does that leave to pick up the tab? The people with money.
Democrats are as eager to spread their legs for campaign cash as Republicans are. So this is the result, government by Halliburton, Exxon and Archer Daniels Midland.
It’s simply “the free market at work” – the same people who’ve screwed you over and over and taught you to like it.
Nor is this a new phenomenon; the basic alignment of political parties today in the United States actually dates to 1896, when William McKinley sold the Republican Party’s soul to Wall Street while William Jennings Bryan pleaded with voters not to crucify workers on a “cross of gold.” It’s ancient dusty stuff from the history books, and if you’ve never heard of it no one can blame you all these years later.
But the die was cast, the storm was unleashed, and now we are inheriting the wind.
It’s December 2010 and Mitch McConnell effortlessly jumps through mental hoops to argue for extending tax cuts for millionaires, while middle class people are losing their homes by the millions.
Obama and the Democrats will go along with this, to get unemployment benefits of $250 a week extended yet again for the New Poor. It’s already been, what, two years since we shed ten million jobs?
Campaigning for the House and Senate is expensive work; D’s are as eager as R’s to sell their souls. There’s only one political party in America now, the Corporate Suckups; the libs and the cons may caucus separately, but for the most part they agree that whatever Murdoch says goes.
On the margins of political life – say, if you’re Gay or Hispanic, Native or Muslim or Black, military or female, sick or disabled – it matters very much whether the D’s or the R’s control Congress and the White House. But it doesn’t matter much to anyone else. So what if 80 House seats changed hands? So what?
The Voters are parked on their couches watching Unreality TV and soaking up corporate propaganda, thinking it’s entertaining. They don’t care that rich people are making big bucks selling them worthless products and inedible, dangerous food, as long as it all looks glamorous, numbs their brain cells and makes them smile.
At the close of the Constitutional Convention in Philadelphia, Ben Franklin said we chose not a monarchy but a republic – “if we can keep it.”
We still have the outward form, but it looks to me like the republic is lost.
Americans are resilient, and in extraordinary times we’ve achieved amazing things. I hope we never lose that capacity. But I don’t see anyone leading us in any direction but corporate hell.
I hate to say it, but as the rich get richer and the poor get poorer, this is the middle class’s own fault. They’re afraid of change (Gays in the military! Same-sex marriage!) and easily seduced to vote against their own best interest, thus enriching the wealthy to exploit them every damn time.
It leads to an unequal society.
And Esau sold his birthright for a mess of pottage.++