Well, in my experience there's almost always more than one answer to every problem, even more so in economics. Keynes is not the one and only answer. Another answer, one that worked exceedingly well during the Savings and Loan crisis, which was very similar, was to put many of the bankers in jail, wind down the S&Ls, sell off their assets to sounder institutions, and mark the assets to market, winding down toxic assets. We could have reinstated Glass-Steagal and forced bankers to become boring in the corporations where savers park there money and remove government guarantees in the corporations where they take investing risks.
Instead, we embraced Keynes and chose to financialize large swaths of our economy, and transferred the debt from private to sovereign, bailed out the bankers with free money, and then made our bankers heroes, all the while screwing the crap out of the 99%, so much so, we have hollowed out the middle class, even more than it was before. Keynesian thinking has been an absolute failure at addressing the root causes. All the bad stuff that was happening before 2008 is still happening, but now it's on steroids. We're all drowning in sovereign debt now. Derivatives are more pervasive than before. Collateralization and asset stripping has metastasized...witness student loan debt. Ponzi finance is now mainstream.
Kicking the can down the road never solves problems. it only exacerbates them. The Fed is never the friend of the 99%, but always the friend of the top 1% bankers. It's important to understand the Fed's transmission mechanism in order to understand just how cancerous that institution is for the financial health of the 99%.
Why do you think Trump loves the Fed so much? Trump is a wannabe big spender. He needs the Fed to enable his spending plans. The Fed is nothing but an enabler of the profligacy of our inept Congress and our Presidents. His pick, Powell, is Yellen with pants. No meaningful difference. |
