With respect to the latter point, Mr. Keen observes that there were several choices about which location in the “economic pipeline” Obama could choose to inject his stimulus. Under normal conditions (i.e. the “borrow-and-spend” paradigm, where “deficits don't matter”), stuffing money into the vaults of the banksters was the most-effective option – since these reckless gamblers have always lent-out at least $10 for every $1 they actually hold.
The problem is that this economic collapse was caused by providing the banksters with too much “easy money” and then allowing them to leverage that debt by an average of 30:1. Even the greedy banksters, themselves, know they have no choice but to de-leverage. Thus, when the Obama regime stuffed trillions into the vaults of the same banksters who caused all the problems – all the banksters did was “sit on” most of that money to reduce their leverage. Last I heard, the banksters had over $600 billionsitting in a “savings account” with the Federal Reserve – collecting 1% interest. Wow! That will sure “stimulate” the economy.
As Keen puts it, the Obama regime is using the wrong “pipe” in the economy. Because it was inevitable that the banksters would use any hand-outs to de-leverage, the “pipe” which pumps money from the banking system into the broader economy has effectively shrunk. This means no matter how much or how fast money is funneled to the banksters, the amount of “stimulus” which actually reaches the economy is now severely constrained. “Stimulus” dollars, says Keen, would have achieved a much greater effect by being provided to the debtors rather than the lenders, because those “pipes” in the economy had not “shrunk” by nearly as much (since neither U.S. businesses nor U.S. consumers were greedy and/or reckless enough to leverage themselves by 30:1).
Put another way, it was always completely obvious that any and every “stimulus dollar” given to the banksters would help only the banksters.
However, as both Keen and myself continue to reiterate regularly, the main problem with measures to fix the U.S. economy is that only the symptoms are being treated – not the “disease”. Keen equates the humungous U.S. debt-load with a “malignant tumor” - a perfect metaphor. It is something which is rapidly growing in size, and guaranteed to kill the patient unless removed.
Yet, instead of removing the tumor, the “cure” being pursued by the Obama regime is the equivalent of “tumor implants” - it is adding more tumors (i.e. more debt) to the (dying) patient, to try to improve the cosmetic appearance of the patient.
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Forget about economics, this is all about arithmetic. Every additional dollar of debt heaped on top of the largest mountains of debt in the history of our species, permanently removes several pennies from the U.S. economy. It doesn't sound that bad – until you multiply that by a trillion. If an economy with a measly $11 trillion per year in GDP is permanently squandering over$2 trillion per year just paying interest on $57 trillion of debt, the best-case scenario is to simply “tread water” (i.e. just try to avoid any further shrinkagein the economy).
It is mathematically impossible for this debt-saturated economy to generatereal economic growth through new debt. The propaganda-machine can churn out any fantasy-numbers it wants. In the real world, all we will see are more job-losses, more foreclosures, and more bankruptcies. Not much of a “recovery”.
