Money and Debt in America

Monday, January 03, 2011

R. Christopher Whalen discusses the American tendency to overspend in order to sustain a lifestyle that is beyond their means. In Inflated: How Money and Debt Built the American Dream, talks about why inflation and public debt are enduring (and perhaps endearing) features of American life—from get-rich-quick schemes from the Gold Rush of the 1840s to the real estate bubble of the early 21st Century.


R. Christopher Whalen

Comments [13]

Peter Talbot from Harrison, NJ

Mr. Whelan gets high marks for what you had time to cover, but there really are HUGE factors missing from his analysis.

The original deficit spending in the USA greatly predates the current mad money-printing exercise. Fact is, the USA was born with a Continental Army paid (or not) in worthless scrip by a bankrupt congress which promised madmen like Morris and Washington untold wealth in the form of deeds to property "in the West", and since US government expenditures depended either on tariffs (when we collected duties from foreign entities) or smuggling/slave-running (when the US or favored sons like Andy Jackson stood to benefit), there has never been a time when America was not a debtor nation in some sense. The fight between "hard money" (for which read: no inflation and specie-backed limitation on credit to prevent debasement of currency despite that banks issued their own "dollars") and "funny money" (for which read cheap bank scrip or electronic credit available everywhere) goes back to the debates that nearly killed the USA
starting in the JQ Adams administration. And the truth is that there would be no USA, no Democratic party, no middle class, etc. unless America had ALWAYS spent beyond its means and ALWAYS used the unfairly compensated labor of slaves or immigrants to add real value to American products and services.
The idea that "capitalism" can be bridled to serve the good of the polity at large is a goofy unhistorical lie invented in Eisenhower era textbooks to congratulate the atomic family on their patriotic purchase of a GM car (on credit), a GI bill education (on tax burden), a GI box house (on tax burden), etc.

Mr. Whelan should focus his analysis a little less narrowly on recent legislative and banking history to reveal the real truth: capitalism is no more (or less) viable than outright planned socialism when it comes to moral behavior. Capitalism (if such a thing actually exists) adjusts faster to the natural inequities of supply and demand (read old Adam Smith), but it doesn't make those inequities more equitable.

Jan. 05 2011 04:42 PM
Thomas Bonito from Essex Fells, NJ 07021

Mr Whaler said that public employees earn twice their private sector counterparts. However, that was contradicted in January 2, 2011 NY Times, "Public Worker Face Outrage as Budgets Tighten." According to Jeffrey H Keefe, a Rutgers Professor, "NJ has one of the highest per capita incomes in the country, and the average teacher makes $66,597, which even with benefits is on par with or slightly behind similarly educated private sector workers." However, "blue collar public workers make more money than their private sector counterparts." Where is the truth in Mr Whaler's statement?

Jan. 04 2011 03:44 PM
amalgam from Manhattan by day, NJ by night

Ah, yes, the long-term, global "Race to the Bottom." This along with high-tech solutions are the two global restructuring Megatrends that are driving changes in the U.S. and throughout the world for the past 30-40 years. These are rarely discussed outside of academia and need to be addressed ASAP, within the U.S. and without. The vagaries of global capitalism are simply shunted aside.

And your guest is correct on the one hand: Big business/the corporatocracy have no reason to be against Obama because he has given them all that they could desire. Finance and big business are simply angered over the Obama admin.'s perceived disrespect of their avocation as "Masters of the Universe."

Jan. 03 2011 01:00 PM
Coach Rich from Murray Hill

So delighted you had RCW on---he is objective, fair, practical, a true compassionate conservative, couageous like Paul Krugman speaking truth to Power, plain speaking and very smart---someone who needs more exposure---Brian needs to get him on next...mille grazie

Jan. 03 2011 12:51 PM
Brendan from Manhattan

Can Mr. Whalen make a distinction between spending and investment?

Also, the debt bubble was created by people taking out a mortgage while the banks securitized it over and over again so that the original asset turns into many times that in debt. Much of this debt is the result of our bloated financial industry. I didn't hear him talk about that at all.

Jan. 03 2011 12:41 PM

Why were banks so willing to loan money for housing when prices were wildly inflated and now are unwilling to lend so people can soak up some of these foreclosures?

Jan. 03 2011 12:36 PM

I like this guy...please consider him as an occasional financial guest, maybe once per quarter

Jan. 03 2011 12:34 PM
jgarbuz from Queens

The move from an agricultural to an industrial and then post-industrial society, meant moving farmers from self-sufficient farms to living into squalid flats and working for paper money wages. There was no money on the farm, only wheat, eggs, milk and meat. But when all those people moved into factories, there wasn't enough gold to use to pay them, so paper scrip money based on "the good faith" of somebody had to be created instead.

Jan. 03 2011 12:30 PM
tom from astoria

How does the current rush to relocate our factories overseas -- which I believe is the fundamental change of our times -- fit into the history of American boom and bust?

Jan. 03 2011 12:29 PM
Amy from Manhattan

Could Mr. Whalen give his opinion on the right wing's claim that tax cuts create jobs? That's not what I've seen--at least not jobs in the US.

Jan. 03 2011 12:29 PM
tom from astoria

How does the current rush to relocate our factories overseas -- which I believe is the fundamental change of our times -- fit into the history of American boom and bust?

Jan. 03 2011 12:27 PM
Amy from Manhattan

OK, so when the US does better the dollar will go up, & when Europe does better the euro will go up. Where are the economies of "emerging" nations in this? Mr. Whelan seems to be ignoring China, India, Brazil....

Jan. 03 2011 12:18 PM
Hugh Sansom

Mr. Wheelman must know that the _legal_ mandate of the Fed includes promotion of employment -- it is not just politics.

What has happened in the past 35 years -- and Whelan ignores -- is the Fed obsession with inflation. For most of the past 30 years the Fed has typically treated inflation as its only concern, ignoring employment.

Jan. 03 2011 12:11 PM

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