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This past week two events highlighted economic news (along with the continuing rise of jobless, now approximately 50m). The first event of note was the intensifying debate within Congress on the next economic mitigation-stimulus bill called the Heroes Act. With corporations fat with cash from the bailout and wage earning households facing the expiration of effects from income checks and extra unemployment benefits, Congress and the two parties are at a crossroads. McConnell and his Republicans don’t want further stimulus for wage earners. He and they want ‘to wait and see’ the effects of the prior $1.74T bailout of business and the ‘opening of the economy’ first. Meanwhile, Pelosi and the Democrats want more income stimulus and unemployment benefits extended to January 2021 for households now beginning to face a ‘fiscal cliff’. The choice is whether a floor is still extended under 120m households to prevent economic depression, or whether that floor is allowed to collapse. The US economy is at a crossroads the next 90 days that will determine whether we experience just another ‘great recession’ or slip into a bona-fide great depression. Today’s Alternative Vision show discusses the state of the ongoing debates and concessions in Congress with regard to the Heroes Act.

The show also leads the hour with a comment about the second major economic event of the past week: Trump’s pre-declaration of economic war with China. Using the virus crisis as an excuse and diversion for his abject failure to lead the US during the current health and economic crisis, Trump threatened financial warfare and sanctions on China. How the US employs financial measures to attack other economies and countries is noted, including manipulation of the dollar (the world’s trading and reserve currency), its control over the international payments system (the SWIFT system), and sanctions to prevent other countries and economies from trading with its imperialist target (e.g. China in this case). These and other levers of financial power are increasingly employed by the US in the 21st century. With the US-China trade agreement of last December in shambles, and China not buying US goods nor likely to buy much in the future, Trump now sees China as a convenient scapegoat in an election year.


    TO LISTEN GO TO:


https://alternativevisions.podbean.com/e/alternative-visions-heroes-act-negotiations-us-financial-imperialism-china/

    SHOW ANNOUNCEMENT


Today’s show continues in more depth the discussion last week on the pending Heroes Act in Congress. Is it another mitigation bill, stimulus bill, or a growing subsidy for business bill. What are Republicans proposing to change the original House proposals in the bill? Senate Democrat responses in progress? What’s the true unemployment rate in the US today. Why has the $1.7T in corporate loans under the March ‘Cares Act’ not being taken up by big business? And why is only $95B of the Fed’s $1.7T liquidity provisions to banks being used so far? Is the bailout of households being converted to more subsidies for business? The show concludes with a discussion of how US financial imperialism works, and why Trump is now preparing to leverage it against China marking a new stage in the China-US economic war. Some commentary on Trump’s emerging 2020 election strategy: election fraud.

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Listen to my recent radio interview with ‘The Critical Hour’ explaining why current US jobless are 50 million: 40m getting benefits+7.3m in the pipeline applying+5m more ‘not in labor force’ and thus not calculated in unemployment numbers.

Also, what’s going on in current negotiations in US Senate to end $600/wk supplemental unemployment benefit in July and replace it with a massive wage subsidy to business–US govt to directly pay business 80% of wages up to $45k per year or more! Is this the beginning of the end of unemployment insurance program? Why Senate Democrats are falling for the Republican drive to replace unemployment benefits with subsidizing business wages. .

    TO LISTEN GO TO:


Critical_Hour_484_Seg_2.mp3<br />

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Watch my 60 minutes May 27, 2020 interview on the US economy with ‘Other Voices’ TV, Paul George.

TO Watch GO TO:

https://youtu.be/M70H0ziTovc— /wp:paragraph –>

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Mainstream economics consistently fails to predict the future. I’m talking about those ‘schools’ of mis-thought, ranging from Paul Krugman on the ‘left’ to Glenn Hubbard and other apologists of business and neoliberalism on the ‘right’.

One of the favorite myths they perpetrate is that ‘wages are sticky downwards’. That means that in conditions of recession or worse, because workers won’t accept lower wages the recession tends to continue. If only workers would allow wage reductions it would mean business would have more disposable income (from wage cost savings) on hand. Business would then reinvest the extra income. Investment would rise. Workers would be rehired. Wage income would then recover and the economy would grow from more investment and consumption.

This fiction has ruled for more than a century. The economist John Maynard Keynes debunked it in the 1930s. But it was retained by the mainstream economics profession nonetheless, even to this day. Just read most of the entry college level textbooks. It’s still there. Along with at least a dozen other false propositions (like free trade benefits all; inflation is caused by too much money chasing too few goods; income inequality is due to workers not educating themselves and making themselves more productive; business tax cuts create jobs–and a host of other nonsense statements with no support in reality.

The notion that ‘wages are sticky downward’ is a clever way to argue that workers are responsible for the lack of a quick recovery from a recession. If they only would reduce their wages it would all be ok in a short while.

But take a look what’s going on right now. As of late May 2020 at least 45 million American workers are unemployed. In just two months they have lost $1.3 trillion in income. More than $1 trillion due to unemployed. Another $260B due to shorter hours of work. That’s a wage reduction of -$1.3 trillion! As in all recessions, workers do experience severe wage reduction–in joblessness (no wages), shorter hours of work, cuts and loss of benefits, lower pension contributions by employers, wage theft, etc. etc. So wages do fall, and are falling today faster and deeper than ever. And is business and investors spending and investing given the wage reductions? No. They’re hoarding the $1.74 trillion in Congressional loans and grants bailouts. And hoarding the $650 billion in business tax cuts also in the bailout legislation thus far (which one hears very little about in the media, I might add).

As journalist David Cay Johnson just revealed in a piece today, the short term cash deposits by business in just institutional money funds (only one source) has risen from $2.3 trillion before March 1, 2020 to $3.3T today. That’s a $1T rise in cash deposits by businesses, just in institutional money funds. More is being deposited in commercial banks. The long run average of business deposits in commercial banks has been around 5% (6% under Obama and 4.6% under Trump 2016-19) to 15.8% since March 1. Businesses and investors are hoarding their cash and stuffing it in their short term accounts in banks, funds, and who knows where else, on and offshore. No doubt some of that will be committed at some point to stock buybacks, dividend payouts, mergers & acquisitions, derivatives speculation, and all the rest of the financial gambling that in the 21st century defines capitalism. Don’t expect much to get into real investment that increases production, requiring the rehiring of workers, that generates wage incomes.

So wage cuts and reductions, now underway, will not result in renewed business investment and general rehiring of the 45 million laid off. Wage cuts don’t result in real investment and growth.

The nonsense economics notion that wages are sticky downwards is just pure economic bullshit today, as it has always been! And so is the parallel mainstream idea that if you can just find a way to boost business cash (via tax cuts or bailout loans) it will lead to economic recovery as well.

Dr. Jack Rasmus
March 24, 2020

Dr. Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020, where the empirical record on wages, investment, taxes, employment thoroughly debunks the various myths and misrepresentations of mainstream economics.

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Listen to my Alternative Visions radio show of friday, May 22, and my background analysis of the recently proposed ‘Heroes Act’, the fifth in the series of US House of Representatives (i.e. Democrats) economic mitigation bills for the US economy. Will it stimulate recovery? Is it a stimulus bill or still a mitigation bill? What’s the background leading up to the Heroes bill? What has the March ‘CARES Act’ accomplished thus far. Why businesses and corporations will commit very little of the $1.74 trillion loans & grants to investment, production and hiring back of the unemployed. Why the unemployment totals are now well over 45m, or about 30% of the work force. (Part 2 of the Heroes Act described in detail to follow next week’s Alternative Visions show on friday, May 29)

TO LISTEN GO TO:

http://alternativevisions.podbean.com

    SHOW ANNOUNCEMENT:


Dr. Rasmus explains the latest Congressional bill to try to stimulate the US economy, called the Heroes Act, passed a week ago. What are the elements? Will they continue to ‘mitigate’ the virus impact on the economy or actually stimulate recovery? Why is McConnell in the Senate, Republicans, and Trump opposed and blocking it? What are their arguments and are they accurate? Rasmus provides a background analysis of the four previous ‘mitigation’ bills, the central CARES ACT passed in April in particular. Why are the large corporations not taking up the $500B in loans, why is the Main St. provision for medium sized corps not even implemented yet? Why and how the small business PPP provision being ‘gamed’ by larger companies? Problems with a primary monetary stimulus strategy that is the CARES ACT.

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Listen to my radio interview of 5-19-20 with ‘By Any Means Necessary’ Radio and my explanation why current health-economic crisis will continue for years, in ‘W-Shape’ recovery with relapses later this year and in 2021. Why Fed central bank monetary policy will NOT lead to more investment, restoration of bank lending, business production, and return of consumer spending (given current 47m jobless and actual 28% unemployment rate). The limits of Fed monetary policy solutions, including MMT. What happens to the additional 45m now jobless health coverage come August? Or when extended unemployment benefits expire in August? Comment on Mark Cuban’s proposal for a $4k/mo guaranteed income to be spent within one week of receipt.

TO
    Listen GO TO
:

https://www.spreaker.com/user/radiosputnik/economist-medicare-for-all-stimulus-for-

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Listen to my Alternative Visions radio show of friday, May 15, when guests Nick Brana and Jerry Perez are interviewed. Topic is the break away of the Los Angeles Sanders’ Our Revolution grass roots organization and move to form an independent political party. Other ‘Our Revolution’ groups status. OR-LA merging with Peoples Party’s 70,000 members.



    SHOW ANNOUNCEMENT
on Progressive Radio Network

Today’s show invites former Sanders’ grass roots organizers, Nick Brana (senior staff member of Sanders’ 2016 campaign) and Jerry Perez (current field director for Sanders’ Our Revolution grass roots organization in Los Angeles) , to discuss the emerging formation of an independent political party in the wake of Sanders’ capitulation, who abruptly dropped out of the Democrat party primary race and endorsed Joe Biden. Rasmus briefly explains the dimensions of the ‘triple crisis’ today: the economic crisis now deepening; the health (virus) crisis accelerating the economic decline that began late 2019; and the political crisis about to intensify even further between the two wings of the corporate party of America—aka Trumpublicans and Democrats. Rasmus reviews the dimensions of the emerging political crisis and the recent trajectory of the Sanders campaign and its collapse. Guests Nick Brana and Jerry Perez discuss what’s happening now with the growing movement to form an independent political party. Brana’s ‘Peoples Party’ with 70,000 members throughout the US and Perez’s LA Our Revolution group and other interested OR groups current considering and discussing going independent. What’s happening at the grass roots with regard to independent party formation. (For more information, go to http://peoplesparty.org and to http://ourrevolutionLA.com )

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