Economic Activity

A couple of items in an item from McClatchy Washington Bureau Friday.

Consumption drives roughly two-thirds of the U.S. economy, so the jobs question is important. People with jobs spend money.

I just cringe every time I read that, every time I read that it is a calmly accepted fact that this country has become a nation focused on consumption, on having things, on spending money.

This used to be a nation focused on building, on producing, on supporting family, community and each other. We used to be the steelmaker to the world and now we import more steel than we make. Shop in the stores today and you literally cannot find a product manufactured in this country. We don’t make things, we buy them, and we incur ever-increasing debt at all levels to do so.

Beyond the economic folly of basing a nation on consumption is what it says about the moral fiber of the nation. I’m not answering that question here, I’m asking it.

The cure for an ailing economy seems to be more consumption. Am I alone in seeing that, on the face of it, this is insane and totally unsustainable?

Not one politician is discussing a return to an economy based on production. No one is talking about a need to be contributing to the world economy rather than being focused on how much we can take from it. Our governing body seems quite content to lead us down the path of ever increasing consumption and ever increasing personal and national debt.

Core inflation, which strips out the more-volatile food and energy prices, remains at the upper end of the Federal Reserve's comfort zone, and if it doesn't subside, it could limit the ability of the Fed to lower interest rates aggressively to spark economic activity.

Two parts of that statement disturb me, both relating to how the government manipulates the people for whose benefit it is supposed to be governing.

First, the most vital function of your income is to provide for the most essential needs of your family: food and shelter. Your core needs are food to feed your family and energy to keep them warm and cook their food, but the government excludes those costs from what it calls “core inflation.” Why do they publish that utterly bogus statistic? The simple answer is that they want to hide the truth as much as possible.

Food and energy costs, they say, are “highly volatile” and make the raw inflation number meaningless. But the truth is that food and energy costs are rising dramatically and are causing real inflation to rise. To hide that unpleasant fact, the government removes the rising costs of things that you must buy in order to survive and measures inflation only based on costs of things that you do not need to buy. “Inflation isn’t bad, the cost of cut glass decanters has only risen one percent.” And that practice started well before the Bush administration; Mr. Clinton did not eschew the use of it.

And “..lower interest rates aggressively to spark economic activity.” That means get people to spend money, which does not benefit the people who are spending the money. It benefits the people who receive the spent money, namely the corporate sponsors of the politicians to whom the Fed, in reality if not in name, answers.

We're standing in a burning house, and not even looking for the exit.

Enjoying the warmth, because it's cold outside.