Thursday, 16 June 2011
Better late than never: Stephen Roach tumbles to the fact that US consumers are not spending.
Stephen Roach is a Yale University academic and non-executive chairman of Morgan Stanley Asia. He devotes a Financial Times article to the point that US consumers are not spending.
Yes, well most of us tumbled to the fact this was bound to happen when heavily indebted households saw the value of their houses plummet two or three years ago.
Roach, of course does not have a solution to the problem, other than suggesting we sit around for years on end waiting for consumers to deleverage.
In contrast, leading MMTer Warren Mosler has been trying to spell out the solution for a long time now. Namely a payroll tax reduction: that feeds stimulus direct into household pockets.
But the political and Wall Street elite would hate to see money flowing into peasants’ pockets. The former want it flowing into their own pockets. That wouldn’t matter too much if they actually spent it on something: butlers, chamber-maids, servants, yachts, you name it.
But they don’t: they use the money boost stock market prices or take the money out of the US altogether in search of better returns around the globe.
Perhaps the elite will finally be happy when the peasants are chopped up into little pieces and turned into dog food.