So What's Plan "B", Boss?

In the often reality challenged world of economic public policy,  the ideas of Lord Keynes continued to define reality, whether you were for or against. And yet, at present, with the U.S. committed to trillion dollar deficit as far as the eye can see and hence committed to fiscal expansion and with the print key permanently stuck (see graphic of Ben's keyboard)

the world economy continues to sputter and wheeze. And the chattering classes continue to gather in conclaves of the like minded to reassure us, but mostly themselves, that their models, whether of the left or of the right, continue to work, if only the idiots on the other side would listen. Stephen Stills said it so well more than forty years ago

There's battle lines being drawn 

Nobody's right if everybody's wrong

If expansionary policies still worked, we would surely be pushing production boundaries, there would be emerging labour and material scarcities, interest rates would be rising and that fourth horseman of the rich people apocalypse, inflation, would be galloping forward to slay the truly righteous -- those with lots of stuff. But that is on planet "policy." 

Here on planet "where we are fucking stuck," however, the picture is somewhat different. Here, the economy continues to have vast slack capacity as those who might actually buy stuff that producers produce are watching their economic prospects, and their children's, decline by the day. There is an already huge but still growing class of surplus people who no one wants to acknowledge because they scare the shit out of us, particularly those of us who might become them. Interest rates only matter to people who can produce or buy stuff. And inflation? We fucking wish!

You see, we are no longer much interesting in actually producing stuff. That we leave to Chinese slaves and Bangladeshi children. Instead, we modern day alchemists think we have discovered how to spin the boring dross of actually doing shit into financialized gold.  So of course, there is asset inflation. There is lots of asset inflation. Stock prices, defying all that is decent and true, continue to rise, as do real estate and commodity prices. This is because these are things that the people who actually have resources, particularly those alchemists who are finding increasingly creative ways to gut the economy, spend their money on: "investments." 

And this is deemed to be a good thing. This is "wealth creation."  And as that learned organ of middle class values, The Ladies Home Journal, told us on the eve of the last cataclysm, in 1929, "everybody ought to be rich." This power of positive thinking horseshit was then, and is now, the sound of the Titanic's orchestra playing Nearer My God to Thee as the great ship and its remaining mostly steerage passengers slip beneath the waves and the rich row away in the limited lifeboats, the honourable among them shedding a tear for those who remain behind. How gallant.

Perhaps it is the case that Lord Keynes' prescriptions will now only offer better and more secure lifeboats for those fortunate few able to escape the fate of the many who remain behind. And perhaps we need to admit that even if we manage a spot on one of the few remaining lifeboats, we do so collectively by leaving our children behind. Keynes' goal, and that of his disciple, Roosevelt, was to save the good ship capitalism from a crisis of its own making. Perhaps it is time to admit that the hubristic "unsinkable" ship is itself the problem.