James Robert Kelley

I’m not going to play with words on this, I think the worst is yet to come for the economy.  If you look at the consumer spending in 2007, when the recession started ( we didn’t figure it out until late 2008 ), you will see that Home Depot and its competitors experienced a downturn in sales.

Since our bubble economy is based on inflated housing prices, which produces credit, the government offered stimlus in the for of housing tax credits.  This created another mini-bubble and profits started to tick up.  The article below you will see the details, but a couple highlights:

Third-quarter sales fell 8 percent to $16.4 billion. The average customer ticket in the period dropped 7 percent to $51.89.

On Monday, Home Depot rival Lowe’s Companies Inc. reported its profit for the third quarter dropped nearly 30 percent to $344 million.

Home Depot profit slides in third quarter – Atlanta Business Chronicle:

The article has the usual Love and Light comments for the economy, and prayers to the false gods of money.  Once you get past all of that, think about this: What will happen when the government cannot afford to keep stimulating?  Look for the answer here, CNN: U.S. about to hit debt ceiling – again.

Two schools of thought are battling in Washington over how to “fix” the economy.  The Keynesian school of thought reasons that increased government spending will stimulate the economy, which is opposed to the school that relies on the “free market” to resolve the current economic conditions organically.

Those who subscribe to the Keynesian school believe that increased spending will promote job creation and increase the flow of capital in the markets.  They point back to the President during the Great Depression, claiming his policies created an environment that paved the way out of the Great Depression.

When employing the Keynesian method, “pork” is not a bad word.  Politicians often use the words “pork” or “pork barrel” to give a negative spin to unfavorable spending.  This has the effect of making the politician look conscientious and conservative with tax dollars.  The current Keynesian leaning administration sugar-coats the spending by calling it a stimulus, thus avoiding the negative label.  In the end, spending, especially pork that favors their long term agenda is acceptable to them and their supporters.

On the other hand, people favoring limited government intervention would rather let banks and auto manufacturers sort the matter out themselves.  They claim the “economic downturn” will more quickly resolve itself without manipulation of the markets and economy.  One of the strongest points is that the current “crisis” was caused by debt, and adding more debt is likened to paying your credit card bill with another credit card.  You delay the issue, but need to deal with a bigger problem in the future.

The correctness of one school over the other is not provable in the now, since the only way to measure success is to see if the tried method fails.  Although, one school is winning: Keynesian.

Why are the Keynesians winning?  Simply put, most of the anti-Keynesian people are supporting the school.  Even Rush Limbaugh supports the Democratic Party’s preferred method.  It all has to do with the slow creep of thinking and position.  More on that shortly.

Politics is mostly a mind game.  If you can get people to huddle into distinct groups, they will be more easily conquered.  The main strategy involves polarization, also known as “divide and conquer.”  We have two main parties in the United States of America: Republican and Democrat.  If you are a member of one of the parties you are either Pro or Anti something.  Pro-Choice, Anti-Abortion.  Pro-War, Anti-War.  Pro-Death Penalty, Anti-Death Penalty.  This Pro and Anti choice forces people onto one or the other side, making the massive middle disappear and the masses easier to control.

The next step is to introduce hot items to get people emotional.  In the abortion polarization the hot item was “partial birth abortion.”  If you are on the Anti side you will become angry, if you are on the Pro side you will fear the angry people and feel that you are about to lose all gains.  In the economic crisis, the hot items are pork and unrestrained spending.

Corporate CEOs are being targeted because they are buying private jets and taking vacations after receiving money from the government.  You cannot totally blame the CEOs, because Congress gave them the money without any strings or guidance.  Once these large companies started doing what many large companies do, Congress and the President made them into a hot item.

The reason these games are played is to create an environment that allows people to feel they can create compromise.  The problem is that both sides of the compromise are on the same side.  Do you want to spend $2 trillion or just $1 trillion?  Forget about spending nothing.  When you are polarized and herded into a direction based on fear, compromise seems reasonable.  People who would normally be opposed to the spending will start to say, “Why not give the $10,000 per person directly to the tax payers.”  Either way the government is increasing spending, but you start to feel like you have control and forget you are controlling a sinking ship.  This is why I said Rush Limbaugh supports the Democrat agenda, he offered ( mostly in jest ) his own stimulus plan to divide the money into Republican and Democrat chunks.  One goes to spending and the other to tax cuts, but the end result is that he is supporting the spending.