HOT MONEY - June 2, 2011

We are being told that there is a recovery happening, but the only real evidence for that is a rise in the stock market. Meanwhile, the housing industry is in collapse, the auto plants are just making money on the pent-up demand, abut 15 million people who want real jobs on which one can raise a family are either jobless or do lower-level work that takes in no evidence that they are skilled workers, or work only part-time but have the training for an advanced job that they are barred from by the slack in the labor market. The rise in the stock market or similar deposits called “investments” are signs only of the purchase of securities by the minority that have money and are used to the expectation that they can increase their wealth not through genuine accomplishments but only through the fact that there are others who will pay even more to agglomerate wealth without making anything of value or inventing anything of worth. This motivation is so widespread that the demand for these supposed pots of gold keeps building up in a bubble until a wrinkle punctures it. We have seen from the New Deal how to get out of a depression caused by such a puncture, but now we have a new Keynesianism from Galbraith that points out that the draining of hot money into projects of genuine social need not only can spread health, wealth and prosperity but also reduces the apparent need of everyone with a bit of spare cash (Spare as shown by the ability to wager it in the Big Casino) in the search for reward for winning the gamble against others similarly ignorant and similarly driven. If we understand the motives that drive people to play in this game in which most are the rankest of amateurs compared with those with enough to bend the rules to their benefit, then we can see the shifting of funds from the feeding of the professionals to the People, in the form of health, education, justice and stability is to nearly everyone’s advantage.