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>From Free Market Fundamentalism to State Capitalism Part II: Treasury’s “Troubled Assets Relief Program” in Trouble By now, it is becoming clear that government policy has been mostly focused on maintaining asset price at levels that the market has rejected. Logic suggests that such a policy will result in hyperinflation at the end of the day that will lead to more bankruptcies down the road in a protracted downward spiral. The government’s attempt to save overextended financial institutions may well cause the total destruction of market capitalism. And if past experience is any guide, unless wage income is indexed to inflation, the dilution of asset value through inflation will only hasten the arrival of total market failure and a total melt down of the market economy. So far, not much is heard from official circles that suggest the solution to the current credit crisis can only come from an immediate and substantial rise in wage income. Instead of bailing out insolvent financial institutions, the government should use sovereign credit to maintain full employment and boost wage income to catch up with inflated asset prices. If the Fed must print new money to save the system, the new money should go to job creation and wage increases rather than to recapitalize insolvent corporations. Full employment and rising wages will halt the fall of asset prices with a rising floor. The approach adopted by the Bush administration is not designed to rescue a collapsing global economy from total meltdown but to resurrect free market capitalism from ideological bankruptcy with state capitalism. October 26, 2008 This message has been scanned for malware by SurfControl plc. www.surfcontrol.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
