Oct. 5th, 2005

sophiaserpentia: (Default)
Since i can't sleep, i thought i'd reply to a locked conversation that took place with a friend regarding my free market post. This friend is a free-market supporter, but was not one of the true targets of my sentiment, since i do not question hir compassion and commitment to genuine human freedom.

In a subtle way it was a Hurricane Katrina entry, because i am still fighting anger and disgust towards those who have sought to argue that the plight of the poor in the hurricane's aftermath was basically their own fault; or, alternatively, that it was the fault of the welfare state for putting people in a state of "learned helplessness." I am still angry and indignant towards victim-blamers who can't stand to see direct evidence of class oppression and exploitation in our society.

If ever there was proof of it, there it is.

I feel strongly that no free market exists, and furthermore that the free market cannot possibly exist (except possibly in a post-scarcity world). In my opinion the dehumanizing effects of commodification, the coersion exerted by creature needs for necessities, and involuntary participation in the labor market by anyone not independently wealthy, are fatal flaws.

That said... i am short on proposals to the contrary. I have leaned of late towards anarcho-socialism. Criticisms of government along the lines of those offered by the mutualists have stuck with me; also the thoughts of the Austrian school regarding cronyism and corruption as a human failing preventing implementation of just free markets; and i have written about the tendency for problem-solving edifices to become problems in their own right for future generations. I am aware of the failures of attempts to institute a socialist government that protects human liberty or civil rights. So i am under no illusions that socialism is necessarily the best antidote for market injustice.

I am also concerned about the potential for intellectual dishonesty that is brewing in my thoughts. To say that the failure of a free market to exist is due to an inherent flaw in the idea of the free market itself, while the failure of socialist democracy to exist is not due to a similar inherent flaw but rather of incidental problems, does not rest easily with me.

I feel i know where i stand, but just yet i feel uncomfortable walking in any one direction.

The idea has been lurking in the back of my mind that a culture which genuinely values life and accepts and celebrates diversity would find ways to alleviate the effects of inequality among its people regardless of the political or economic system it used. So perhaps our foremost goal should be the nurturing of such a culture. I fear, though, that commodification and starvation present insurmountable obstacles in the development of such a culture. (Perhaps i should be less willing to say never with regards to socio-political theories.)

Where does it begin? Where does it end?
sophiaserpentia: (Default)
Recently the Fed raised interest rates again and will continue doing so, despite awareness that the recent surge in inflation was due to Hurricanes Katrina and Rita.

So why don't they lighten up? Why contribute to the ongoing quadruple-whammy of rising interest rates, rising energy prices, across-the-board inflation, and stagnant real wages?

Well, the theory behind monetary policy is that it is possible, by regulating interest rates and the money supply, to keep the economy from becoming overheated when it is exciteable, or to stimulate it when it seems depressed. The goal is to keep the economy expanding at a nice even keel, which means learning to anticipate when it is going to overheat and when it is going to slow.

Generally, inflation is used to gauge the degree of overheating, while unemployment is used to gauge the degree of economic deceleration. All else being equal, inflation indicates that wages are rising rapidly. When people have more money they demand more goods. When people demand more goods, their prices go up. This is called "demand pull" inflation because the rising demand "pulls" prices higher.

But surely the people who run the Fed are smart enough to see that not all inflation is the same. "Cost push" inflation caused by the hurricanes is not the same as "demand pull" inflation. The hurricanes did not cause the economy to overheat, they contributed to its slowdown.

The news media are reporting that interest rates are going up because of inflation, but the real reason appears to be concerns over the attractiveness of Treasury bonds to foreign investors. The powers-that-be have apparently decided the American public shouldn't be aware of the precariousness of our current situation.

The Fed is caught in a real bind here because of the GOP's outrageously poor fiscal policy. Their "borrow and spend" strategy is supposed to spur today's economy by charging all the costs on a credit card payable by our descendants. The effects shouldn't be harming us already, it should take at least a generation for the bills to come due. But the national debt is so dramatic that like a black hole it is warping the world's economy.

The debt is financed by selling Treasury bonds to foreign investors. The bulk of this investment is coming from Japan and China. They are footing the bill, at interest, for W's corporate welfare and wars of aggression. Foreign nations see it in their interest for the United States to be healthy. But with the dollar dropping in value, due to the size of the national debt, the interest rate has to go up to keep Treasury bonds looking attractive. Should foreign investors decide to stop footing the bill, we'll be up the creek.

Edit. "Oddly enough," she says sarcastically, i can't find any news on what is happening with US money supply. I can tell you about the money supply in Romania, Europe, Brittain, Nigeria, China, and South Africa, but not in the US.

Profile

sophiaserpentia: (Default)
sophiaserpentia

December 2021

S M T W T F S
   1234
567891011
12131415161718
19202122232425
2627282930 31 

Most Popular Tags

Style Credit

Expand Cut Tags

No cut tags
Page generated Jul. 8th, 2025 09:33 am
Powered by Dreamwidth Studios