the investor/corporation can leave his $ in the bank or not borrow if he doesn’t like the risk/reward of hiring the next person and not starve. lots of companies today not hiring because of flat demand, but still not starving, but instead making big bucks.

We have a problem in the United States of America. The middle class isn’t making enough money. And because they aren’t making enough money, our economy is fragile. It is so fragile that a few banks making bad trades brought America to its knees.

Now, according to the bankers and elites, how much the middle class makes isn’t important. All that matters is the total amount of money made in the economy. That the bankers and elites happen to get a king’s portion of this is just a happy accident. Or they say it is because they say they are better than the middle class: smarter, faster, more deserving.

I say: Bunk. You’ve heard of “trickle-down economics”? I say we need “trickle-up economics”. The elites in this country have shunned the ideals of Thomas Jefferson and Andrew Jackson – the ideals of shared prosperity and opportunity. They’ve moved far past the idea that greed is good – to a society where greed is the only good.

And they’ve forced us to live in this society.

Now, this problem didn’t happen entirely by accident. Not entirely.
Part of the story we are in the mess we’re in is that the elites in this country have deliberately impoverished the middle class of America. They’ve done this by telling us a number of clearly false things. They’ve told us hurtful speculation is really investment, that wealth can only be accessed by borrowing money from a bank, by deliberately confusing the banking economy with the working economy. They’ve made us poorer deliberately – because they truly believe that a poorer middle class was good for America!

But that isn’t the whole story. Part of the story is that our economic experts aren’t real experts at all. They’ve forgotten what the first economists considered to be the most important idea of economics: Broadly shared prosperity creates stronger economic growth.
We ran into this problem because we rely on people who “say” they are experts to actually “be” experts. When you call the plumber, you just want your plumbing to work, and you expect him to know how plumbing really works.

You aren’t calling a plumber so they can give you a theory about why these pipes should result in the optimum flow rate in some pretend world where… you get the picture. You want practical results.

But we don’t get that practical, no-nonsense thinking from our economic experts. They base their thinking on some ideal world where everyone acts like a computer, where a government is just like a person, where things appear out of nowhere because somebody wants them, where the middle class is dispensable.

And now, with GDP growing while unemployment soars, it’s even worse. We’re entered a true reverse robin-hood economy. An economy where the wealth flows to the top. Where we tax the poor and hand billions to the bankers.

A top heavy structure is not healthy for the growth of any economy – ask all the Kings of the last thousand years. They were rich too, but their countries didn’t have any economic growth.

We’ve had very rich people for a long time – since the time of Christ at least. But the middle class is a very recent – and fragile – creation. And only since the middle class was created has there been any real economic growth.

This Democratic President and congress wasn’t elected to enrich bankers and insurance executives, they were not elected to provide jobs for union leaders. They were not elected to hand out billions on trades gone bad.

They were elected to get America back to work – and get the middle class back to a position of strength.
Part of the problem I talked about earlier was that our economic experts aren’t really experts, but we listen to them anyway. They’ve taken away our choices – our economic freedom, if you will – with their wrong-headed thinking. And we’ve been following them for the last 40 years.

The result has been a monumental economic and social disaster. We have an obvious shortage of spending power. The spending power needed to make mortgage payments, car payments, and do a bit of shopping- it just isn’t there.

In the 70’s, when the Steel workers were being destroyed by this new economic model, we should have listened to them. In the 80’s, when the farmers were the next people hit by this hostile takeover, we should have listened to them. When we realized in the early 90’s that people hadn’t had a pay raise for 15 years – it’s over 30 years now – we should have sat up and took notice. We didn’t, and here we are facing another Great Depression.

So, how do we fix it? We fix it with a full payroll tax holiday. A full payroll tax holiday would give nearly every working American a 7% pay raise tomorrow. A payroll tax holiday would give many small businesses higher profits. A payroll tax holiday would give a huge boost to demand – and get lots of Americans back to work.
What I specifically propose is the US Treasury would make all FICA payments for both employees and employers that regressively remove 15% of every pay check from dollar one up to $106,800 of income.
15% is a lot of money. In fact, for most people, payroll taxes are by far the highest taxes they pay.

Rather than funding the banks from the top down with an improbable trickle-down theory that would have made Reagan blush, this tax cut restores the incomes necessary to support all economic activity from the bottom up.

This is “Trickle-up economics”. It is that simple. Just stop taking away trillions away from people that work and giving it to bankers – and our economy will right itself.

Unfortunately, the top Democrats have been against this kind of tax cut. Payroll taxes are so regressive, I don’t know how any self respecting Democrat can tolerate them for a single moment. But I can’t blame them entirely – they’ve been listening to the same economic experts that got us into this mess.

People don’t realize were still using 100 year old ideas on how money works – even though we have a fully modern money system. These experts are using gold standard theory to run the modern world – and we can see the unpleasant results.

The real crime is – some of them get it, some of them understand, and they still refuse to change policy. Here is Chairman Bernanke telling Congressman Pelley exactly how the Federal Government spends in May of 2009:

(PELLEY) Is that tax money that the Fed is spending?
(BERNANKE) It’s not tax money. The banks have– accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed.

Our government has only one way to spend money – they” mark up” numbers in bank accounts. Our main central banker gets it, but still doesn’t do anything with this information. Maybe he likes seeing millions out of work- I don’t know.

The spending doesn’t ‘come from’ anywhere. When you are watching a football game, where do the points come from? Where do they get the 6 points they put on the scoreboard? Do the scorekeepers mug some kids playing football in the yard, and take the points from them, so the pros can have 6 more points? No. These points don’t come from anywhere. There are all the points any team needs.

And on the other side, the government does not get anything when it taxes. The IRS just changes numbers down in our bank accounts. Just the opposite of what happens when the government spends.

So why tax at all? To regulate spending power is one reason. Taxation is the thermostat. When the economy is too hot, raise taxes to cool it down. When it’s too cold, a payroll tax holiday will warm it back up to operating temperature.

Is it too warm or too cold right now? I’d say, “too cold”. Let’s turn up the heat.

The Democratic elite have it wrong. Their wrongheaded ways are doing serious damage to the US economy. The people are struggling under their failed economic agenda. And their latest moves towards what they call ‘fiscal responsibility’ will only cut spending power further and make things even worse.

Tea Party Democrats can lead the way towards true fiscal responsibility. This means setting taxes at the right level needed to sustain buying power, output and employment. And today that means a full payroll tax holiday.

I can write stuff that speaks to the smart but non-expert economic crowd.

Let me take a crack at it and post it.

Inflation restulting from higher wages is not bad for anyone but people who hold lots of money. Inflation restulting from commodity prices going up is bad for everyone but holders of commodities.

Just because prices are going up doesn’t mean that things are necessarily bad.

A major problem with the monetarist view is that all inflation/deflation is created equal. It isn’t.

Deflation resulting from better more efficient modes of production is not bad for an economy. Deflation resulting from millions of people not working is horrible for an economy.

This is not rocket science.

Return on investment is the investor’s income, just like wage is the laborer’s income. Why is it not a fair game?

even when the unemployment pool gets down to one guy he needs a job just as much as when there were 10 million unemployed, and from that point of view- work or starve- his bargaining power is the same.

1. Why is it good to protect creditors and people on fixed income at the expense of debtors and people on variable income?

2. Prices rise faster than wages precisely because workers voluntarily bid up those prices. That’s what inflation is, isn’t it?

3. Why is it good to create incentive to hold/save money?

1. Bondholders. Inflation results in higher interest rates and falling prices on existing bonds.

2. Creditors. Inflation means that debts are repaid in cheaper dollars.

3. Seniors. People living on fixed incomes loose purchasing power.

4. Workers. Wages do not keep up with inflation. Savings are eroded.

5. Business people. Material and labor costs rise faster than they can be passed on to consumers, reducing profits.

6. Politicians. Politicians don’t like inflation because they get blamed for it.

Monetarism and NAIRU(non-accelerating inflation rate of unemployment) are about using unemployment as a buffer against inflation based on the Philips curve. Keynesianism holds that fiscal policy is superior. However, most New Keynesians like Krugman accept monetarism along with fiscal policy. MMT is Post Keynesian.It rejects the assumptions of monetarism, namely that quantity of money is determinative, the loanable funds doctrine holding that government borrowing crowds out investment , and the operational principle that interest rates to control money supply.