Where have I heard this before?
Consider The Washington Post,
here:
"CBO saw a dramatic difference in middle class income gains because it captures information that tax records miss, such as income from transfer programs such as Social Security and Medicare, [economist Stephen J.] Rose said."
A libertarian made this same argument to me very recently: that the middle class is intact if you count transfer payments made under the tax code.
For a libertarian to argue with a straight face that the middle class is intact because of income redistribution is an offense to capitalism. To be middle class from the purely economic point of view is to have achieved a level of economic independence and status not shared by the lower class. It is symbolized by home ownership, and by that new car smell every few years. Dependence on government transfer payments to maintain such status does nothing but obscure the truth of what is really going on.
This is consistent with the wider practice of economic liberalism in our time, which is similarly designed to hide the truth while posing as its custodian at the same time.
Mark-to-market accounting rules have been changed since April 2009 under Financial Accounting Standards Board rule 157, making price discovery of many "assets" nearly impossible. Circumstances became catastrophic under the old rule during 2008, so the solution was to change the rule. Call it moving the goal posts.
The Fed, acting as the Board's tag team wrestling partner, through QE has been buying up the crappy assets of the banks and transferring them to its own balance sheet in order to hide the truth of their crappiness and restore the banks to health. At the same time the Fed makes war against the free market with its repression of interest rates to the zero bound, driving up the value of risk assets, especially housing, stocks, bonds and commodities while punishing savers and aspirants to the middle class. It's not a coincidence that this helps only the elites, who cannot continue to spend money they don't have unless they can borrow it on the cheap.
A truly conservative economic universe, that is, one aligned with reality, would not permit any of this.
Too bad we don't live there anymore. Libertarians shouldn't pretend that we do.
