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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Friday, October 26, 2012

Why Does Goldman Sachs Believe in Deficit Reduction and Austerity?

The CEO of Goldman Sachs has joined 79 other big US corporations in calling for reduction of the federal deficit.  Why?

The reasons listed by the Guardian article include:

--to avoid a "fiscal cliff"
--so investors' worries about rising interest rates are alleviated
--to show bipartisan action is possible
--in order to reform the tax system
--to improve "efficiency" of healthcare (Medicare and Medicaid)
--to trim tax rates for all income groups

The  Simpson-Bowles Commission could be  used as a framework for reforms, according to the big corporations.

What is missing from the above analysis is the rest of the citizenry of the US, i.e., the unemployed and others suffering from the recession brought to us courtesy of the TBTF banks.  The picture painted by the FIRE sector corporations is perhaps the solution for them but certainly not for others.  There is no mention of a bold initiative to provide for full employment for all who wish to work which would enable the economy to become a fully functioning one once again.

The corporations consider only themselves in their solutions.  One can see why employees do not play a key role, because when profits decrease, banks like Goldman Sachs relieve themselves of employees to efficiently improve their profit-making.

Reducing the deficit will mean imposing austerity on the most vulnerable populations--the poor, the working poor and the middle class all of which have just gone through a great recession. 

Goldman Sachs is part of the neoliberal consensus in Washington that believes austerity is needed to get the economy working again.  But we know that
Neoliberalism Kills:  Part Two
By Joe Firestone - New Economic Perspectives
. . . .
So, here we are, a Government without a GBC [Government Budget Constraint] that can never run out of money involuntarily, and we’re facing a persistent, well-funded and powerful neolliberal consensus in Washington that wants to impose austerity on all of us in the name of a non-existent GBC that it passionately asserts will cause the nation to “go broke,” if we give priority to all of our major problems, while forgetting about their fantasy that we are doomed if we don’t reach some entirely arbitrary level of debt-to-GDP ratio, that they have no way of even deriving in any rigorous way from their neoliberal theory of government fiscal responsibility.

With increasingly grave warnings of doom they try to make us believe that we are facing a national crisis that must be met with a bipartisan solution that will be impervious to the inevitable protests that will arise from most people when their solution causes suffering — as it inevitably will, since as MMT shows, deficit reduction and government surpluses, in the presence of trade deficits, and desires to save in the private sector will inevitably cause destruction of private sector financial assets. Since the elites are in a better position to protect their financial assets than other Americans, the burden of austerity and the resulting hardships and fatalities will inevitably fall on most of us.

We will be sharing the sacrifices. They will be getting richer from their efforts in the international gambling casino, and from seizing everyone else’s property when austerity renders debtors unable to repay their debts. [my emphasis]

Negotiation of that “grand bargain” they are seeking will probably use Bowles-Simpson as a framework, even though that framework was never adopted by the “Catfood Commission,” and even though it has received great resistance in Congress since it was published by the two Chairs in the absence of agreement needed to make it a commission product. In any event, the main thrust of the austerians/deficit hawks: that fiscal policy should focus on a long-term deficit reduction plan cutting back the social safety net, is still very much alive politically in Washington, DC and another attempt to implement it is likely either in the lame duck session, or early next year in the new Congress, barring an implosion in Europe before then that could derail the neoliberal deficit hawk drive for austerity.

Read the full essay here


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