Home > General Comment, political-economy > Get set for the Mother of all Bubbles…

Get set for the Mother of all Bubbles…

The collapse of the Congressional opposition on Friday signaled the likely dissolution of the Party of Wall Street, and the victory of the Party of Washington. (27 Republicans and 32 Democrats were cajoled or bribed to switch sides.)

With the passage of the Wall Street bailout, the Street has been effectively annexed by Washington – a conclusion seemingly confirmed by the German government’s decision to guarantee the deposits in its own banks to stem the financial collapse unfolding in the world market, and similar moves by the governments of Ireland, Iceland, Belgium, The Netherlands, Britain, Denmark, and Luxembourg.

Wall Street imagined itself an independent force on the American landscape – pressing for greater and greater autonomy and deregulation, and growing in influence within the machinery of state to such extent even the Party of Washington began bending to its will.

Wall Street fatuously promised the magic elixir of non-state economic growth and rising living standards, even as it reduced the great mass of American families to debtor status not unlike that of sharecroppers of the post-Civil War to mid-20th Century – encouraging debt to extend the abysmally long working day far beyond that which was necessary to satisfy the requirements of modern production.

As one writer, Tom Walker of the Shorter Working Time listserv stated to us:

What is debt? In banking terms, debt is a withdrawal from an account in anticipation of future deposits. Debt is allowing me to take money out before I put it in. The banking system allows its customers, as a whole, to take more money out than they collectively have on deposit. This is called monetary creation. The core idea of economic growth has been to stimulate growth through a controlled expansion of debt (fiscal policy) and the money supply (monetarism).

Well, Benjamin Franklin said, “Time is money.” That is to say, disposable time is something valuable in itself, which potentially can be converted into cold, hard cash if so desired. If one can stimulate economic growth by withdrawing funds before you deposit them, then who is to say that you can’t do it by systematically withdrawing hours of work? “Oh, but it sounds rather preposterous.” Perhaps, except that the debt model of economic growth sounds no less preposterous and yet it is accepted uncomprehendingly by people who would be horrified by the notion that working less might actually be a better option than owing more.

That is the paradox. The same people (economists and those who believe them) who refuse to even entertain the notion that shorter working time could create jobs, accept that expanding debt will create jobs without caring whether they understand why. But I repeat myself. And to tell the truth, it is necessary to repeat this paradox many, many times until it becomes plain what kind of an absurdity we are dealing with here.

With Wall Street effectively annexed by Washington, the Party of Wall Street now finds the interests of it most important constituency virtually identical with the former. Goldman Sachs’s Masters of the Universe, have become highly paid government bureaucrats simply managing Washington’s growing portfolio of dependent entities.

We will continue this theme.

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