Commentary on Political Economy

Friday 26 August 2011

Bernanke and QE3 - Reprise

Paul Krugman says pretty much what I have been saying here

He also links a paper by Bernanke that we discussed in connection with Bernanke's general approach to monetary economics on this site (just look for titles with Bernanke or "Notes OnMinsky").

The situation, in a nutshell (and lots of nuts it has, too, in the semblance of learned bourgeois economists!), is that the economics profession is trying to save its "economic science" by preventing Bernanke to do what he had always wisely said he could do as a central banker to rescue this rotten miserable system: and that is, to make it "costly" for the owners of social resources that they do not wish to put to use because it is not "profitable" to do so.... "to use it or lose it"! In other words, deploy your capital or lose it to inflation!

Inflation would also have the magic quality to cut the "real" cost, in terms of social resources devoted to it, of repaying existing public debt and therefore lightening the burden from workers and government, allowing more "productive" investment to take place and more resources to be devoted to improving social and economic infrastructure.

And this in turn would allow the US and Western economies (still capitalist) to regain employment levels and political stability against those "mercantilist" Asian and "emerging" (all "export-oriented") economies that rely on the "absolute exploitation" of their workers! This would occur because dollar inflation would force their exchange rates up and make their useless cheap exports uncompetitive and force them to improve their productivity and internal domestic demand, rather than look to accumulate reserves for the dictatorial regimes that run them!

So there are a number of things that QE3 would help achieve not just domestically for the US but also globally by forcing capitalists worldwide to improve the living and working conditions of their populations, rather than "rush to the bottom" with competitive devaluations. The first and foremost task must be to destroy the Chinese dictatorship that poses a clear and present danger to the entire world!

Soon, I will seek to review the New Neoclassical Economics of Michael Woodford and the like. Cheers.

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