Sunday, November 7, 2010

The Modern Dysfunctional State

The US is turning into a banana republic.

Here's a post from Paul Krugman on his NY Times blog that highlights one of the many, many instances where legislators in the US -- mostly right wing Republicans -- have purposefully put laws in place which create ridiculous situations. They then turn a blind eye until the problem erupts.
Wag The Me

Um …

Richard Thaler says,
The lame-duck Congress soon will face a pressing issue that directly concerns both themes: the estate tax.

The uncertainty imbedded in this tax was actually written into the law in 2001 by a Republican-controlled Congress.

In what some wags have called the “throw momma from the train” provision, the law stipulated that the estate tax would disappear in 2010, only to reappear in 2011 at the lower exemption level and higher rates that were in place in 2001. (To give proper credit, this provision should really be called the “planned Bush tax increase.”) The law has made 2010 the best time for tax-conscious rich people to die
“Some wags” was me — in a column titled Bad Heir Day.

Of course, the amazing thing here is that we saw this coming more than nine years ago — and have done nothing to address the issue.
Only a fool or a foolish nation would do such a thing. The US government has does such a thing. Therefore...

And here is a post by Brad DeLong pointing out the idiotic inconsistencies in the Federal Reserve's "policy"...
Oh Boy...

Mark Thoma:
Economist's View: "Federal Reserve Reflects on its History": Bernanke says he's not trying to create inflation as a means of stimulating the economy:
After its big move to boost economy, Federal Reserve reflects on its history, by Neil Irwin, Washington Post: ...Fed Chairman Ben S. Bernanke and a long list of past and present Fed officials gathered this weekend for a conference on the history of the central bank.... Speaking at the "Return to Jekyll Island" conference sponsored by the Atlanta Fed, Bernanke argued that the steps are not as revolutionary as many observers in the financial markets and the news media have suggested.
There's a sense out there that, quote, quantitative easing or asset purchases are some completely foreign, new, strange kind of thing and we have no idea what... is going to happen. Quite the contrary - this is just monetary policy.... It will work or not work in much the same way that ordinary, more conventional, familiar monetary policy works.... I have rejected any notion that we are going to try to raise inflation to a super-normal level in order to have effects on the economy.
"We're not in the business of trying to create inflation," Bernanke said. Rather, he said, the Fed is trying to avoid a further drop in inflation...
And Mark Thoma is upset:
Since an increase in inflationary expectations is one potential way to stimulate the economy, Bernanke is "blocking one of the main channels through which his policy might actually work."
Yep. This is not good at all. "Crying 'Fire! Fire!' in Noah's Flood" indeed...

Where is the Ben Bernanke who had such a willingness to do what economic stability required in the fall of 2008? What happened to him?
With "leadership" like this, can "banana republic-dom" be far off? I vote for Sarah Palin as the "first princess" of the new Banana Republics of America, a country dedicated to strict constructionism and equal opportunity dysfunctionalism.

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