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The U.S. Federal Reserve has announced its latest attempt to save the U.S. economy. This time, it is an open-ended commitment of $85 billion (including purchasing $40 billion of mortgage-backed securities) each month—until the economy shows improvement. If it doesn’t show improvement, it might even increase the amount. Along with that, it is keeping the bank interest rates low until 2015.

The house of cards is collapsing. The weakness is in the foundation—the debt-based economy, but the only solution the “experts” seem to have is to pile more cards (debt) on top of the structure—as many as it takes. Of course, they don’t see it that way. According to experts, the debt is not the problem. It is understandable that they see it that way; they’ve made their fortunes on offering debt. How could something that has made them so rich be flawed? They only see things in terms of the potential to get into debt and the potential to raise the value of stocks.

Immediately after the announcement was made, analysts were watching the reaction of the stock markets. The question is, what does Wall Street show about the conditions of the small and medium-sized businesses (less than 500 employees) that provide about one-half of the jobs in the U.S.? What does the direction of the DOW, the S&P 500, or the NASDAQ show about the ability of a local business to hire someone or make a needed purchase? Wall Street only shows indications about businesses that are publicly traded. This latest effort is directed at making it easier for people and businesses to obtain debt, and we know how well this has worked to fixed the economy so far, right?

The money to buy mortgage-backed securities is going to large banks and investment firms, those who currently hold the mortgage-backed debt. Are these not the same firms that, along with the government, got us into this mess in the first place? Are these not the same firms that got a big chunk of the money from the two previous bail out attempts? Weren’t those attempts supposedly the answer that would correct the economic problem? Wasn’t the promise of these bailouts that it would ultimately benefit the common citizen? (In other words, a form of the so-called “trickle-down” economics.) By giving all of this money to the banks, it was supposed to relieve the banker’s worries so they would start freely lending again, so they would stop holding their reserves and make debt and other finance mechanisms affordable again. How has that worked out? The other $45 billion is going to governments by purchasing bonds. Just how is increasing government debt supposed to help the economy recover?

This new plan is just another form of exchanging one form of debt for another, and exchanging who is holding the debt, so it really doesn’t solve the problem of the debt itself. Somehow this is supposed to result in more people getting jobs and boosting the economy, and the Fed is committed to shuffling the debt around until it does. What else can we expect from those whose world economic view makes them believe that perpetual debt is the recipe for a healthy economy? Well, not everybody agrees with that view.

What we really need is a solution that focuses on the common citizen, one that helps families become financially independent of these huge institutions that only want to keep them in debt. We need a society where half of the working population is not dependent on large companies in order to acquire the needs of their daily lives. We need stable, local economies throughout the land, so that a problem in one area means that those in another area still have the means to assist them, rather than being dragged down with them.

We need Distributism.

 

About the author: David W. Cooney

 

David W. Cooney serves on the Editorial Board of The Distributist Review. His articles have appeared in Gilbert Magazine and he has also contributed to The Hound of Distributism, a book of various authors. Originally from Southern California, he now lives with his wife and two children in Western Washington state where he works as a network administrator.

 

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7 Comments

  1. Why does this seem to be so hard for so many to understand?

  2. Pingback: Why is Distributism so Hard to Understand? » The Eclectic Essaysist

  3. Well said. Thank you! Now how can we start?

  4. Paul,

    There are several things we call all do to start.

    First: Pray.

    Second: To the greatest extent possible, and this will vary for each family or individual according to circumstances, support locally owned businesses, small businesses, and worker-cooperatives.

    Third: Vote for those whose positions are the closest to the Distributist view, and let them know that this is the reason they are getting your vote, and where you think they fall short of supporting a just society.

    Fourth: Share the vision with friends, family, and anyone who will listen whenever you can do so. Lead them to our articles and try to help them see the shortcomings of our current system and that there really is another alternative besides Socialism and Capitalism.

    Fifth: Be patient. This will be a long process. Distibutism has been around as a political and economic movement for 100 years and we’re still fighting the fight. Like the early distributists, I believe the fight is worth it. I don’t write articles because I believe the change will happen in my lifetime (although that would be great); I write them because I believe that there is at least hope it could happen for my children or grandchildren.

    My next article, Utopia, tries to address what I believe the biggest challenge is to implementing Distributism – the currently accepted philosophical outlook that underlies our current economic and political environment.