Why don't we get it yet?

You might have heard the news recently that Britain is slashing government, military and public workers in an effort to cut their staggering debt and restore health to their economy. This is, of course, immediately denounced by the general press as "hurting the poor". It won't work, they say, and the poor will get poorer. Print some more money and Party on!
Well, I've got news for you. They're getting poorer anyway. Ladling borrowed and printed money on an already heavily indebted people merely gives the temporary illusion of prosperity. The money they have too little of is now worth less as a result. The debts they couldn't afford before now become a chain as the inescapable tax of inflation without income growth strangles their meager finances, making them a slave to debt. Doug Kass summed up our government's policy perfectly with the term "Screwflation".
Screwflation, like its first cousin stagflation, is an expression of a period of slow and uneven economic growth, but, its potential inflationary consequences have an outsized impact on a specific group. The emergence of screwflation hurts just the group that you want to protect -- namely, the middle class, a segment of the population that has already spent a decade experiencing an erosion in disposable income and a painful period (at least over the past several years) of lower stock and home prices. Importantly, quantitative easing is designed to lower real interest rates and, at the same time, raise inflation. A lower interest rate policy hurts the savings classes -- both the middle class and the elderly. And inflation in the costs of food, energy and everything else consumed (without a concomitant increase in salaries) will screw the average American who doesn't benefit from QE 2.

Why then do we insist on this path? Who benefits? Whoever collects interest on that ever-growing mountain of debt, that's who. Our old pals the Banksters, who happen to own all the major media outlets, Congress, and everyone's overpriced mortgage. Wall Street does OK as well, as anything that can't be printed (like gold, equities, you-name-it) soars as the dollar sinks.

There is hope, however. Little old Germany, the 4th largest economy in the world, told our President "No, Danke schön", when pressed to print more money for "stimulus". Instead, they chose to cut government spending and lower taxes, allowing the real economy to heal as opposed to the Ponzi Finance economy our leaders prefer. Here's the link to Econophile's piece that you won't see in the major networks...Germany defies Keynesian stimulus and recovers nicely as well as Germany's latest opinion on "Quantitative Easing". Germany says Federal Reserve headed the "wrong way" with Quantitative Easing. Germany did what most Americans are screaming for and successfully revived their real domestic economy. Britain is preparing to face reality and have their public unions and government SHARE THE SACRIFICE their private sector has been suffering for years. Yet our Federal Reserve is preparing to print up another Trillion or so in "prosperity" November 3 because of "uncomfortably high unemployment". The same unemployment that has gone steadily higher despite the 1.7 Trillion they printed from March 2009 through May of 2010 (of course that's when the stock market bottomed, but I'll save that for another post). There is a a hard, but healthy, choice to be made regarding our future but unfortunately our Nintendo / American Idol / No Pain/ Sugar High/ Go to School Forever on Government grant/ Money grows on trees government keeps choosing the easy route. Surprise.