GM and Chysler Bankruptcies

[kandrathe]

So raise fixed incomes. Distributional problems can be solved with taxation. It's an issue, but it's hardly an insoluble one, and it's certainly not worth crippling the economy to avoid.

Over in the other thread on the Economy, I added a quote from the London Banker Blog, <blockquote>"Had Fisher observed the Greenspan/Bernanke Fed in action, he might have updated his theory with a revision. At some point, capital betrayed into unproductive works has to either be repaid or written off. If either is inhibited by reflation or regulatory forbearance, then a cost is imposed on productive works, whether through inflation, higher interest, diversion of consumption, or taxation to socialize losses. Over time that cost ultimately hollows out the real productive economy leaving only bubble assets standing. Without a productive foundation, as reflation and forbearance reach their limits, those bubble assets must deflate."</blockquote>Wouldn't doubling the cost of social spending just result in more debt, which would further accelerate the hollowing out of the *real* productive economy leaving only bubble assets standing?

Funny how Keynes vs. Hayek is just playing all over again. Apparently, we've learned almost nothing in 80 years.

Yes, funny = strange, not funny = haha. Being a pragmatist, I'm only interested in the soothsayer who accurately reads the skeins of the future and knows which strings to tug on to prevent catastrophe. The neo-Keynesian's running the show were able to get the race car of the economy going really really fast, when it suddenly careened off track and hit the wall. Obviously, their foresight is lacking. Maybe it is time to consider listening to some dissident voices. At least humor them, and climb down from the ivory tower and join the food riots in the streets. When Irving Fischer personally lost $6 MM, and bankrupted his brokerage firm and most of his clients during the market crash of 1929, it forced him to go back and analyze how he could have been so wrong.