"Diminishing returns of over-investments in complexity" - is the stimulus a hopeless attempt at reviving a moribund economic system?

[Eric Garland]

If you don't read Jim Kunstler on a regular basis, you ought to. His book "The Long Emergency" predicts the end of peak oil and more importantly the end of suburban consumer life in America and around the world.

He sees a significant strategic shift - to put it mildly - in the coming years. His doubt about the stimulus package is caustic:

The attempt to restart "consumerism" will be equally disappointing. It was a manifestation of the short peak energy decades of history, and now that we're past peak energy, it's over. That seventy percent of the economy is over, especially the part that allowed people to buy stuff with no money. From now on people will have to buy stuff with money they earn and save, and they will be buying a lot less stuff. For a while, a lot of stuff will circulate through the yard sales and Craigslist, and some resourceful people will get busy fixing broken stuff that still has value. But the other infrastructure of shopping is toast, especially the malls, the strip malls, the real estate investment trusts that own it all, many of the banks that lent money to the REITs, the chain-stores and chain eateries, of course, and, alas, the non-chain mom-and-pop boutiques in these highway-oriented venues.

Here's a huge question then: are we merely (!) at a major disruption in the economy that will eventually right itself, or in a complete shift away from old values, something that will require major restructuring of the global economic system?

Either way - is Keynesian economics going to work this time around?

[Jason]

it wont work. they may fill in a crack here and there w. gov't spending due to the fact that people areant spending any money, but long run it will be a failure. 70% or so of our economy is based on people purchasing things, and as long as unemployment slides there will be a lack of consumer confidence. how can the govt stimulate that? combine that with a retail model that is way more than we need, i mean, does every suburb need 9 starbucks and 3 home dopts? probaby not... what we have now was based on a model that could not sustain itself. major restructing will be needed, and will happen. infact, it is happening now.

*please excuse spelling and grammer mistakes

[Eric Garland]

I'm not sure what to think about this, but it should be considered. This Congressman is saying that the interventions are keeping us from devolving into chaos. It gets good around minute 2:10:

I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on... Here's the facts. We don't even talk about these things. On Thursday, at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn't be further panic and there. And that's what actually happened.

If they had not done that their estimation was that by two o'clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it.

I don't like the fear-mongering approach to political reform, but that doesn't mean that we shouldn't try to avoid nightmare scenarios. At least many leaders seem to be acting in good faith here.

[James Lee]

It's not a moribund economic system. We simply have moribund values.

Endless consumption, growth for the sake of growth, CEO worship, instant gratification through easy credit.... these things all need to go by the wayside.

Adam Smith, the "founder" of capitalistic thinking, considered economics to be a branch of moral philosophy. Ponder that one till your head hurts....