[WPA] workers constructed or repaired more than 125,000 buildings, including 83,000 schools; 800 aiports; 950 sewage plants; and 650,000 miles of roads. They built or improved 78,000 bridges and 25,000 playgrounds; terraced 271,000 acres of eroded land; and taught two million people to read. They also ran a famous Federal Art Project, which hired destitute artists to create murals for public buildings, posters, and paintings. The WPA produced a highly regarded series of state guidebooks and an acclaimed collection of interviews with former slaves, and it played a major role in building the San Antonio Zoo, New York City’s LaGuardia and Washington’s Reagan airports, and the presidential retreat at Camp David.
In addition to the Works Progress Administration, there was the Tennessee Valley Authority, which provided electricity to some of the most impoverished parts of the country. Roads, bridges, and electricity increased production for decades into the future, long after the initial jobs program money had been spent.
Compare this to "stimulus" efforts today. Obama's plan, costing roughly $800 billion, spends about $80 billion on infrastructure projects, mostly for more and bigger highways rather than the things we will really need in 5 or 10 years, namely railways and public transportation. Anyway, $800 billion pales in comparison to the $14 trillion so far given to banks.
Many people have argued that the stimulus plan will do little to get us out of recession, precisely because it gives fish but no fishing poles. Meanwhile, most people are angry at the money being given to the banks. But there is another concern which is far more important: printing money to boost production does not destroy currencies, but printing money for the financiers can lead to total currency collapse.
Ellen Brown takes a close look at Germany's hyperinflation of the early 1920's, and their economic miracle of the 1930's. In both cases, oddly, the government simply printed money out of thin air. As she concludes, it's what the government does with that money that makes all the difference in the world.
The dramatic difference in the results of Germany’s two money-printing experiments was a direct result of the uses to which the money was put. Price inflation results when “demand” (money) increases more than “supply” (goods and services), driving prices up; and in the experiment of the 1930s, new money was created for the purpose of funding productivity, so supply and demand increased together and prices remained stable. Hitler said, “For every mark issued, we required the equivalent of a mark’s worth of work done, or goods produced.” In the hyperinflationary disaster of 1923, on the other hand, money was printed merely to pay off speculators, causing demand [available money] to shoot up while supply remained fixed. The result was not just inflation but hyperinflation, since the speculation went wild, triggering rampant tulip-bubble-style mania and panic.
One can hardly say that every dollar of Obama's stimulus plan will result in a dollar's worth of production. You would be hard pressed to argue that every ten dollars in stimulus money will result in a dollar of true production.
Even if we stipulated, generously, that $200 billion of the stimulus money would create real goods and services (i.e. actual wealth), this is out of nearly 15 trillion dollars so far spent alleviating the economic crisis. Mostly, we are doing what the Weimar folks did, funneling money to banks. That leaves our currency, and us, at the mercy of the financiers. People worry about China selling its dollars, but another risk is that bankers begin piling on bets against the dollar and against US Treasuries. That, as in Weimar, could ruin our currency.
Fiat currencies, backed by nothing, have worked wonderfully in some instances, and for hundreds of years in the case of British tally sticks. The trick is to print them and convert them as fast as possible into real goods and labor. As historian Webster Tarpley says, if we print our currency into oblivion while building solar arrays and maglev trains and putting in geothermal furnaces, at least in the end we would still have power, transportation, and heat.
But no. We print money and hand it to banks by the trillions, hoping against hope that Goldman Sachs never builds up a massive short position in Treasuries.
I SO AGREE. We have totally lost sight of what true wealth is. To hand dollars (newly printed or whatever) to what Kunstler calls "the hallucinated economy" is sheer madness and can never result in the (supposedly) desired end. We need food--not from agribusiness, but from sustainable farms; we need manufacturing; we need to build what our communities need. Handing money to financial institutions as if this will save the economy of the U.S. is nothing but an exercise in sheer fantasy.
ReplyDeleteI voted for Obama knowing that I would be severely disappointed. That's saved me from being, well, unexpectedly disappointed.