These are the prospects the Tea Party is selling!

They just said on the news that the world economy is tanking. My conjecture is that this is exactly what austerity measures -- accepted by a host of foreign nations -- do. This is because the removal of money from circulation among the masses, is relentless, both by the government and by the wealthy whose businesses are designed to accumulate it. If measures are not taken, to prevent or slow the accumulation of wealth by large corps, coupled with the gov't collecting taxes and reducing spending. Well, in the end it's a formula
for economic stagnation or worse.

Yesterday they said on the news that during the last market drop, some 40 billion dollars were withdrawn from mutual fund accounts. So, one is left to wonder who withdrew that money. Was it a handful of money managers -- 100,000, or less, of them drawing some 4,000,000 or more apiece? Or 4 million, or more, smaller investors drawing some 10,000 apiece to make ends meet? Drawing sums to keep their businesses running, stave off foreclosure or otherwise
pay down debt. Or simply a "flight to safety".

Either way, if it was "little people", the economy should see some kind of "bounce" over the next few weeks, if they're paying expenses with this money. Of course any bounce will be short lived. Businesses live on a constant stream of cash flows. If their products aren't moving and profitably so, then staying in business simply fritters away capital that would be needed, if and when their prospects improve. If the business isn't paying the interest on it's loans from profits, then it's got to engage cost cutting, to stay afloat. That means cutting staff and hoarding capital, with which to meet their loan payments.

Only the gov't does not have to produce anything, in exchange for the money it collects! It's "liabilities" are the responsibilities that governing entails. If it also cuts costs, then expect it to also shed its attention to its responsibilities. Assuming governance is needed by a nation, to manage it's affairs, then predictably the nation will suffer ever more greatly, as gov't cuts it's spending. Meanwhile, how does the gov't meet it's own interest payments, when the economy isn't producing the taxable incomes needed?
The answer is: Inflation! It simply prints up the money it needs, without the income to "cover". The expansion of the money supply, in this way, reduces the value of the currency. Meanwhile the twin uncertainties of inflation and/or higher interest rate expectations, leaves businesses in a quandry as to which way to turn next.

The sum of it all is that the middle class, becomes cash strapped, and can then, no longer support the mass buying routines that keep companies afloat and profitable. Unlike in earlier times, most of today's products, involve the product of several suppliers. These suppliers, in their turn, depend on sales to many companies in order to remain profitable. Thus, most companies cannot survive with just a handful of wealthy customers to serve. When they go out of business, in spite of the fact that they have a few customers willing to pay higher prices, the supply chain breaks and several other companies, find themselves unable to complete the production of their own products. This turns into a "cascade" of businesses either failing or closing down for lack of parts and supplies.

So, even for the wealthy this has dire consequences, as even they cannot get
the goods or services they want or need. People dropping out of the utilities grids, for example, causes food service businesses to pay more for their utilities. The loss of laundry services or glassware factories, puts the favorite 'watering holes" of the wealthy out of business. Soon they have no
where to gather in pleasant, well attended surroundings. What good is living in a "gated community" if you have to make your own glassware, fire your own chinaware, weave your own cloth etc., on and on? You might just as well be living among the "unwashed", for all the work you'll be required to do for yourself, even though you have the money to pay others to do your work, you will find few people who are capable. And less equipment that can be run by hand for low volume output. Worse, in the end you're talking of turning your gated community or mansion into a factory of sorts. Gone will be the fashion and glitteratti you once knew. It will not return for many decades to come.

This is more than reason enough to try to preserve the pillars of the currently
in place economic cooperative that are the nations (and global) complex modern
supply chains. If they break down, it will probably take a century to reconstitute them. During which time everyone, rich and poor, will have to work very hard indeed, to meet their everyday and sundry needs.

How very 18th Century of this "Tea Party"!