Is the US headed towards a socialist government?

[kandrathe]

The whole idea of the liquidity trap is that the gears have stripped from the interest rate crank. The Fed has lowered interest rates down to almost absurdly low levels, and yet lending is not going back up. I'm not sure I believe that the liquidity trap is true in this case, but it is one possible way that the value of the currency might not be so very predictable.

What is happening has little to do with what I would advocate. China's decade of market manipulation has done its damage, and at this point their star is still rising(at our expense), whist the USA and Europe's are falling. The question in my mind is whether China's star will be dragged down equally with the global economy.

We are at a point where interest rates are at rock bottom, but still slightly above zero. Bank holding are at a record high, meaning they are sitting on a mountain of money without available trustworthy lenders. The forecast for the stock and bond market for the next year is at least another 10% drop. The Fed is printing a crap load of money. So, why would I want stocks, bonds, or even a depreciating currency (in the form of dollars)? The biggest losers will be the same ones crushed in the Carter years, which are those people on fixed incomes. Retirement savings will be crushed by the duel forces of a failing capital investment marketplace, and high inflation. As you know, I'm not really a Keynesian. But, I think he was instrumental in helping to understand boom and bust cycles.

Suffice it to say, I'm definitely not a fan of the latest Trillion dollar spending boondoggle by the US House , US Senate, and soon to be signed by Mr. Obama. For example, if we really wanted to encourage jobs, then why not a $20K tax deduction for each job created? $20K times 200 million jobs would cost 4 billion dollars. Instead, what they have passed is a potpourri of liberal spending which is funding the agenda of the democrats without regard to what effect it will have on the economy.