Monday, January 21, 2008

Howard Katz Speaks

"The newspapers say that you have decided to fight a pre-emptive war against recession. Your method of doing this will be to stimulate demand by running a budget deficit. ... If someone thinks that a recession threatens, then he has to ask himself why, all of a sudden, should an entire country start to get poorer. A country, of course, consists of millions of people, almost all of them trying to get richer. ... Anybody who studies the law of large numbers would expect that at any given time some people would be getting richer, some people would be getting poorer and most people would be staying the same. To have sudden shifts from economic growth to recession would be like the cold half of the air molecules going over to one side of the room and the warm half to the other--for no discernable reason. In fact, what is mistakenly called a recession is a credit contraction. ... It is thus the paper aristocracy (which benefits from the credit expansion) which suffers. To call credit contractions recessions is propaganda. ...The purpose of the Bush program is to 'stimulate demand'. ... The fact, however is, demand is not wealth. ... It is the creation of goods and services (which satisfy demand) which constitute wealth. ... The assertion of the paper aristocracy that recessions exist is simply propaganda. Since they benefit by creating money, they have decided to use 'consumer demand' as a euphemism for money. When they say, 'an economic stimulus package is needed soon' (to stimulate demand), they mean, 'allow us to create money'," my emphasis, Howard Katz (HK) at, 14 January 2008.

Way to go, HK! See also my 26 November and 15 and 24 December 2007 posts. I have made the oxygen, not air, molecule analogy myself many times.

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