In his Decatur Daily column, occasional Hit & Run commenter Franklin Harris greets the return (at least to the manufacture-on-demand-DVD ghetto at Warner Archive) of the great prophetic film of the 1970s. It's not a celebrated visionary masterpiece like Network or THX-1138 or even Bad Ronald.
The movie that explains how we got here is Americathon, a farce (and perpetual Reason favorite)featuring the explosive casting mix of Elvis Costello, Chief Dan George and subsequently murdered starlet Dorothy Stratton Stratten. As Harris explains, the movie, written by the Firesign Theater's Phil Proctor and Peter Bergman, is prescient not only about monetary policy but about the long shadow cast by Jerry Brown:
Set in the then-future year of 1998, "Americathon" depicts the United States as flat broke, and the mortgage is coming due.
No one can afford a house, so everyone lives in their cars. But that's OK, because no one can afford gasoline, either, and everyone rides bicycles or jogs to work.
(Conveniently, everyone also wears track suits because riding a bike in slacks is just asking for trouble.)
The dollar is worthless, and everyone has to pay for everything — including phone calls — in gold. (Ron Paul called to say, "I told you so.")
Meanwhile, the Chinese have become successful capitalists, Vietnam is a vacation and entertainment hot spot and the Jews and Arabs have put aside their differences to create one huge country, the United Hebrab Republic.
You know, apart from that last bit about the Jews and Arabs, none of it seems that farfetched now, does it?
Presiding over America's decline is President Chet Roosevelt (John Ritter), a former California governor apparently based on once and future California Gov. Jerry "Governor Moonbeam" Brown.
The more-zany-than-amusing-in-the-classic-sense comedy posits a revenue-raising telethon to bail out the federal government, with featured acts including Jay Leno boxing with his mother (above) and the Vietnamese "puke rocker" Mouling Jackson. Younger readers familiar only with the dour Jerry Brown of today may not recognize Chet Roosevelt as being modeled on the New Agey Brown of 1979, a figure everybody from Jimmy Carter to Jello Biafra feared would become president in 1980. In a characteristically madcap scene, the president and puke rocker get ready to "ball," as they used to say:
Note that a telethon to pay off the national debt today would be even more hopeless than the one in Chet Roosevelt's time. Based on current household net worth of $53.5 trillion and a current debt of $13.8 trillion, every American would have to pledge about 39 26 percent of his or her life savings to make the telethon a success. Maybe if they gave out copies of Of Thee I Sing as pledge gifts.
In an Arizona Republic column, Robert Robb proposes another solution to the problem of a dollar/credit system as terrifyingly misdirected as this dance number. He says it's time to let interest rates go where nature wants them to go—up:
In the United States, the Fed is trying to artificially lower interest rates supposedly to reduce the high unemployment rate. The theory is that if the cost of borrowing is less, then businesses will be more willing to expand and hire. This is a serious misdiagnosis. The reason companies aren't hiring isn't because interest rates are too high.
The Fed is also giving mixed signals. Fed Chairman Ben Bernanke is saying lend and borrow. But banks report that Fed regulators are telling them to maintain tight lending underwriting and reserve even for performing existing loans.
But that's not the real issue. Banks also report a low demand for loans. And surveys of small businesses do not show access to credit as a big problem.
The policy of fighting unemployment with low interest rates has been given a long enough run to conclude that it isn't going to work. Moreover, an employment surge fueled by artificially low interest rates might not be sustainable. Economic recovery should be built on a solid foundation. Current monetary policy doesn't offer one.
Without the intervention of economic policy makers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits.
Savers are getting screwed by the current monetary policy, and screwing savers is seldom a wise economic move.
Interest rates are the return to saving and investing. Increase the return and you are likely to get more of them. You might even bring risk capital back into the housing market.
An interest rate spike would also increase the cost of debt service and force the federal government potentially, and many of the states definitely, into Iceland-style bankruptcy. We can agree to disagree on whether that would be a good thing. At the very least, higher rates would force government at all levels to reduce the growth of spending. In other words, this is probably the last time you'll hear anybody making the case for higher higher interest rates.