I recently watched the critically acclaimed independently produced movie, “Blue Collar Boys” by director/producer Mark Nistico. What I experienced was an emotional ride with a blue collar family struggling to keep their construction business alive during the 2008 financial meltdown. The viewer can see, first hand, how such misguided Fed policy and political maneuvering damaged working families, both economically and emotionally.
Synopsis: Spoiler Alert!
Mark Nistico takes us to suburban New Jersey, where Charlie “Red” Redkin (Gabe Fazio, Beyond the Pines) struggles to keep his father’s construction company afloat. He finds at every turn, where work had been completed, customers couldn’t pay. This is the aftermath of collapsing stock portfolios and devalued housing. Families used their homes as ATMs, cashing in equity, to fund remodeling, additions and other home improvements. What happens when house values suddenly depreciate? How do you pay those debts off? Red and his close friends discovered how the empty well of housing equity was ruining their chances at the American entrepreneurial dream.
To make matters worse, politically connected developer Gene (Ed Setrakian, The Sopranos) refuses payment to Red’s father Senior (Bruce Kirkpatrick, The Wire) for contracted work that had already been completed. To keep the work coming (and his house from foreclosure), Senior offers to complete his part of the housing development for half the cost in half the time. This last ditch attempt to keep his construction company alive costs Senior his life. Red quickly realizes the severity of the debt and the frustration that his father endured to keep their heads above water. In his desperation, Red turns to a life of crime to get the needed fast cash to support both the family and his father’s business only to be conflicted by his conscience.
Feeling his back against the wall, Red swallows his pride and returns to Gene to regain the contract his father lost. What happens next is gut wrenching. Red discovers that the land his father had been using as loan collateral had been rezoned by Gene’s political friends under the Wetlands Protection Act. All of the emotion of pride, revenge and desperation explode into a violent conclusion.
What Just Happened?
This independent film does an excellent job of portraying the frustration working families endure every day. As this blog has been establishing, there are real flesh-and-blood consequences for bad Fed policy and political machinations. What Mark Nistico produced was a poetic rendition of just such consequences.
When Austrian economists warn of the boom and bust cycle in the economy, this is what they are talking about. When the Federal Reserve attempts to create it’s “wealth effect” by inflating the money supply and lowering interest rates, investors are misled. The ensuing boom led home owners to cash in their equity on ever increasing artificial housing valuations. They used this easy money to improve their own homes, flip houses and purchase houses that they really couldn’t afford. The mainstream continued to tout the false narrative that housing prices always appreciate and the housing boom would never end. Consumers were lead into a trap that they could not get out of. As “Blue Collar Boys” demonstrated, the result was pretty devastating.
What I saw in this film was a microcosm of the ensuing macrocosm. Just as Red faced frustration at every turn, the frustrated public witnessed the well connected being bailed-out and small entrepreneurs forced out of business. Neighbors lost jobs and their homes. Bankruptcies and foreclosures have hit all time highs. The insane response from politicians is to keep the same bad actors in charge and maintain the same inflationary Fed policy of easy money and zero interest rates. It has been Ben Bernanke’s policy to try and re-inflate the housing bubble, inflate the stock market and bond bubble and even grow an ever increasing student loan bubble. It appears Janet Yellen is in agreement with Bernanke. Public frustration mounts only to have Obamacare come along and cancel health insurance policies and reduce the population to part-time employment. Consumers are paying more for food, energy and housing. The government states that we need more inflation because “the price level” isn’t high enough. Econometrics teaches students to ignore the “micro white noise” of human action when calculating policy results. Mainstream economists think they can tune the economy like a faceless machine. At their peril, just as Gene discovered, human beings can only be pushed so far. The consequences that we face in the next bust will be unprecedented.
What is Being Done?
The solution to what ails the economy is actually pretty simple. Economist George Riessman has written articles and spoken on such solutions here and here. The problem is the lack of political will to actually face the coming catastrophe of high inflation and exploding national sovereign debt now. It is not popular to take away someone’s free lunch at any level of influence. People tend to get angry when they learn they’ve been duped. So what has the State been doing?
We often see reports of government agencies purchasing mass quantities of hollow-point ammunition. Even the Post Office purchased millions of rounds. Local and State law enforcement is becoming ever more militarized and brutal. The Federal Emergency Management Agency (FEMA) is constructing internment camps. Supreme Court Justice Scalia recently told Hawaiian law students, when asked about Japanese-American internment camps during WWII, that “you are kidding yourself if you think the same thing will not happen again.”
The State understands that this paper money pyramid scheme known as the U.S. economy will not last forever and they are making preparations. When millions of Charlie “Red” Redkins have had enough and push back they will answer. As Red found out, it’s not going to be pretty.