If you look at the mean income for the top 20% of all families, it also shrinks between 1989 and 1992, grows between 1992 and 2000 and falls between 2000 and 2010. So those tax cuts for the rich didn’t even help the rich. Kind of ruins the class warfare story, doesn’t it?

Modern mainstream academic economics simply is not geared to asking relevant questions, nor are its practitioners interested in finding answers. Instead, economists claim that Austrian business-cycle theory “fails the market test,” not because it fails to explain things, but rather because the conclusions that one must draw from the ABCT do not include economists pulling magic economic rabbits from hats — not even economists who have won the Nobel.

Why is this important and why do we need to pay attention to it? Manufacturing weakness is an indicator that there is not enough real capital to support growth. That is, real production and the savings earned from it aren’t sufficient to grow the economy. Part of the reason is that we are still in the bust phase of the Great Recession, the liquidation phase, and the “economy” (banks, real estate owners, the debt-burdened middle-class) have not yet liquidated all the malinvestment from the boom. Another reason is that ZIRP and quantitative easing have actually been further destroying real capital by diverting capital (real and fiat) into ventures that will prove unprofitable and do not create real savings (such as financial speculation). The so-called “recovery” was a Fed fiat money illusion based on exports driven by a devalued dollar.

Senate Democrats are scrambling to rewrite portions of President Barack Obama’s jobs bill as they seek elusive party unity around the measure even as Obama tries to pin the blame squarely on Republicans for Congress’ failure to act.

The problem as we see it is that QE won’t do much for the economy, either in the short-run or the long-run. But that won’t inhibit them from doing it. The short-term impact will be good for the financial markets and it will be good for the multinational exporters as the dollar is further trashed in order to compete against a falling euro. But other than that, it will keep interest at capital-consuming low rates, it will continue to divert money into financial speculation or projects that will ultimately be unprofitable, it will encourage federal spending by funding the Treasury markets, and it will cause more price inflation. What it won’t do is encourage the formation of real capital that makes economies grow.

Call it the culture war or partisanship, but whatever it is that divides Americans against one another — distracting them from the real problem in Washington, DC — is also no hero in this story.