BushWorld: Where Did All The Money Go?

Follow the M3:

If jobs have not increased, salaries have gone down, and the value of business has not risen, where is that 35 percent growth in the economy?

There is a number called the M3 money supply.

The M1 is basically cash, plus checking and "current" accounts. The M2 adds savings accounts, money market accounts and CDs up to $100,000. The M3 adds in the big CDs, Eurodollar accounts and other large exotics.

Already rising very fast, the M3 took off like a rocket after 2001. The Fed stopped publishing the M3 in 2006 (conspiracy theorists, please note.) But a quick look at the chart of its growth, and assuming its trajectory continued, clearly shows that the M3 grew by something in the range of 35 percent.

The entire growth of the economy under Bushenomics is accounted for by growth in the money supply.

The administration did not directly inflate the economy by 35 percent.

They pumped it by the size of the deficit. The rest happened this way....

Read the full article by Larry Beinhart for details, but basically the Bush administration printed off wads of money to keep everything looking better than it was.

The subprime crisis, the housing bubble, whatever you want to call it, is not the problem.

It's a symptom of pumping in money with no place to go.

Other symptoms are no job growth, no business growth, no stock market growth, falling median incomes, disappearing pensions and health plans, and the fall of the dollar...

One way to think of what the administration has done, is as a leveraged buyout. That's when someone buys a company, using the company itself as the collateral for the loan used to purchase it, usually at very high interest, then pays off the interest by cutting the work force and salaries, selling outsets and even breaking up the company.

It's good for the guy who makes the deal, skims the cream off the top and gets rich. (The company that Mitt Romney got rich working for specialized in doing that.) It's good for the lenders, who get a good return (if the buyer is able to squeeze enough money out of his purchase), but it's bad for the work force, bad for the company, and, if no one comes along to replace it, bad for the business as a whole.

We've experienced a leveraged buyout of the national economy.

Beinhart calls for some more responsible fiscal policy goals, financed by increased taxes on the rich. But he feels compelled to add this disclaimer:

By the way, this is not a call for socialism! Or other ism! Except a call for sensible and effective capitalism.

Denouncing capitalism remains the great thoughtcrime of US society! Are we allowed to ask why???

Also interesting to read the comments on that story at AlterNet - there is a lot of anger brewing out there in BushWorld.