Where is the US economy headed?

@hawkeye10,

hawkeye10 wrote:

Quote:
The economy needs to shrink? That doesn't seem a very brilliant or correct statement.
the government has only two choices, inflate the currency or collect more taxes so that the increasing debt payments can be made. Assume that we do not elect to do hyperinflation that means that less and less money will be available to circulate through the economy, as it is skimmed off the economy by the government in the form of taxes, and sent to china and so forth.

I think inflating the currency is the only real option. Collecting more taxes, or you actually mean raise tax rates, will only deflate the economy further to the point that tax revenues will not in fact grow as projected, in fact they may diminish over what they would otherwise do, such that government spending only increases along with more borrowing. For example, when people are not working, Obama's solution is to continue to expend more money in unemployment benefits, among other things like paying businesses to hire workers they don't need, etc. It ends up being a situation of government spending being inversely proportional to the economy, as the economy shrinks, government spending increases as does borrowing, so that your solution is not a solution at all, it is only further expansion of a problem.

Quote:

the plan for four decades was to grow the economy fast enough through juicing the economy (using low taxes, low regulation, cheap loans, and corruption) to pay the debts, but that has never worked, and the constantly busting bubbles have done a lot of damage to the fabric of America. I assume that we have given up on that, that we are going to buckle down and attempt to pay our bebts with one of the two methods that will work.

Well, deflating the economy is certainly not going to work at all, for the reasons I stated above. The key is spending. Spending must be curtailed, that is the key to the situation, not increased tax rates which might only deflate tax revenues further. You speak of low taxes and regulation, but that in fact has not happened in my opinion. Cheap loans subsidized by the government have been a problem created primarily by Democrats, but it is a problem not being fixed and not even yet recognized by Democrats at this point in time. To solve any problem, the problem must first be identified. Hawkeye, you have basically laid out some problems as you perceived them, but much of what I see wrong in your post is that you have mixed and confused problems with symptoms, and the solutions often address only the symptoms, not the problems. The primary problem is out of control government and government spending, which has yet to be identified and fixed by the party in power.

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@realjohnboy,

realjohnboy wrote:

It is silly for the government to offer incentives to businesses to hire people when there is no work to do.

Not if the reason there's no work to do is that consumers aren't buying---because they have no jobs.

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@Thomas,

Quote:

Not if the reason there's no work to do is that consumers aren't buying---because they have no jobs.

the whole alleged point is to allow business to modernize to entice people to let go of some of their money, But I dont see that as being the result. I think it will be a short term stimulus to create a few jobs, that are not needed, which will leave who ever took the loan to pay it back, and considering that the loan did not do them a lot of good they will have trouble doing so.....which is how I get to thinking this loan is predatory. You know that everyone thinks that they will beat the odds, that if they could just do XYZ to their business would roll in money, but it rarely happens that way.

the reason that people will not let go of their money is because self interest tells them that they need to economize. It makes no difference how many great places they have to spend their money, or how many more we add, they are still only going to spend X dollars

1 Reply

@Thomas,

Thomas wrote:

realjohnboy wrote:
It is silly for the government to offer incentives to businesses to hire people when there is no work to do.

Not if the reason there's no work to do is that consumers aren't buying---because they have no jobs.

Uh, Thomas, did you actually write that?

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@Thomas,

Or, if they have job(s), they are underemployed. Most people who work in retail stores have a second or third job.

Another reason why people might not be buying is the more or less informal boycott of Chinese goods.

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Epic battle looms in Washington over expiring Bush tax cuts

Epic? I don't know about epic, but it should be interesting.

Story

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@hawkeye10,

hawkeye10 wrote:

Quote:
Not if the reason there's no work to do is that consumers aren't buying---because they have no jobs.
the whole alleged point is to allow business to modernize to entice people to let go of some of their money,

I don't know who alleges this point, and I don't know that nobody else alleges any different point. But the point, as alleged, sounds like a botched attempt to explain the subsidy's rationale in everyday terms. It's the explanation that's botched, not the rationale itself. The rationale is fairly standard textbook macroeconomics on how to bolster aggregate demand.

Of course, the most efficient implementation of the rationale would be that the government just hire those workers itself, WPA or CCC-style. But that doesn't seem to be politically feasible these days.

1 Reply

@plainoldme,

plainview wrote:

The 22 statistics detailed here prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

Those 22 statistics say nothing about the transition of people from one economic level to another as they grow older and more experienced--and finally as they retire, and then die falling to the zero economic level.

The middle class is alive and well as some enter it, some stay in it, some rise above it, and some fall below it.

However, since 2008, starting with the BCD (i.e., Bush Congressional Democrats) and subsequently the OCD (i.e., Obama Congressional Democrats), many are more likely subject to transitioning to lower economic levels from the higher levels, even while the upper economic levels themselves are increasing in percentage of total wealth.

BCD made and the OCD are making many of the same mistakes as Hoover and Roosevelt. Hoover and Roosevelt both thought they could cure depressions with higher taxes and more federal spending. Hoover and Roosevelt were wrong. BCD tried to do it by increasing total federal spending and failed. To date so is OCD failing for the same reason. The likely future consequences of OCD's even greater increased spending and promised tax increases is worse.

OCD must be replaced before it is too late to avoid their much worse wreckage of the American economy!

1 Reply

@ican711nm,

Gee, I wish your IQ fell between 90 and 110.

1 Reply

@plainoldme,

90 is still too high for ican

1 Reply

@cicerone imposter,

I had a lower threshold in mind. Something that he could grow into.

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@plainoldme,

That might be between 40 and 50.

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One of the problems with the economy is just what do we all need? Not want, need.

I really wanted the grey cropped pants that JJill had in their spring catalog but their prices are way beyond my spending limit and I found what appears to be a worn not more than three times pair, in stone rather than grey, at a thrift for $5. The color isn't what I wanted but the cotton is super soft.

I wanted to keep bees, have a vegetable garden made up of raised beds (clay soil and burrowing critters), get a chicken coop and three hens, stain my deck and coat my basement floor. If I couldn't afford a pair of pants, how could I afford those things?

But, let's face it: How much would those purchases have stimulated the economy?

Now, my little granddaughters celebrate their birthdays in July and August and I would have loved to purchased gifts for them but can not afford them. Again, a few presents just isn't going to do that much.

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How high an IQ is required for a president to reverse these declines? Will Obama increase them, or will he reduce them?

Quote:

ftp://ftp.bls.gov/pub/suppl/empsit.cpseea1.txt

Year……TOTAL US CIVIL EMPLOYMENT
1980……………..99 miillion [CARTER]
2000……………137 million [CLINTON]
2007………..….146 million [BUSH43]
2008………….. 145 million [BUSH43]
2009,……….....140 million [OBAMA]
2010.……………139 million [OBAMA] (June)

Year.…….PERCENT OF CIVILIAN POPULATION EMPLOYED
1980…………………………………….59.2 [CARTER]
1988…………………………………….62.3 [REAGAN]
1992…………………………………….61.5 [BUSH41]
2000…………………………………….64.4 [CLINTON]
2007…………………………………….63.0 [BUSH43]
2008…………………………………….62.2 [BUSH43]
2009…………………………………….59.3 [OBAMA]
2010…………………………………….58.5 [OBAMA] (June)

How high an IQ is required to determine what really caused these declines?

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@ican711nm,

Why are you yelling??? Use the standard type size or everyone here will boycott you.

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@ican711nm,

Quote:

How high an IQ is required for a president to reverse these declines? Will Obama increase them, or will he reduce them

the most noticeable decline over my lifetime has been the quality of the jobs....they are more tenuous, pay (especially deferred pay) is down, the size of the benefit package on average is down, there has been a relentless drive to get more work out of each worker, there has been a lot of chin wagging about reducing the family/work conflict so that families can do better but pretty much nothing has been done...from my perspective everyone has failed.

1 Reply

I've been reading about Republican Rome's segue into Empire and then ruin and it's amazing how many parallels there are in the first phase with the trends I see now.

Maybe there is nothing new under the sun.

When Mr Obama did his British Petroleum speeches I knew you had a gobshite leader. Although I must admit that one or two voices were raised expressing a sense of shame.

1 Reply

@Thomas,

Thomas wrote:

hawkeye10 wrote:
Quote:
Not if the reason there's no work to do is that consumers aren't buying---because they have no jobs.
the whole alleged point is to allow business to modernize to entice people to let go of some of their money,

I don't know who alleges this point, and I don't know that nobody else alleges any different point. But the point, as alleged, sounds like a botched attempt to explain the subsidy's rationale in everyday terms. It's the explanation that's botched, not the rationale itself. The rationale is fairly standard textbook macroeconomics on how to bolster aggregate demand.

Of course, the most efficient implementation of the rationale would be that the government just hire those workers itself, WPA or CCC-style. But that doesn't seem to be politically feasible these days.

I think you are referring to the Obama policy to reward companies for hiring new workers, am I correct? I wrote to you a question if you actually wrote what you wrote, when you responded to rjb in regard to this issue in this fashion: "Not if the reason there's no work to do is that consumers aren't buying---because they have no jobs." rjb had just made the point that it makes no sense to hire new workers without more customers to create the demand for more work needing done.

Now, perhaps I am not trained in the economy as you may claim to be, but common sense would tell me one thing, that being that demand should lead supply. If you already have an adequate supply of products or services, it makes no sense to spend more money on increasing the supply or inventory to sell, until sales increase. For the government to pay businesses to hire more workers to increase output of products, to ostensibly increase numbers of people with jobs to increase demand for products, that seems to be a bass ackwards way of approaching the problem.

I have run a business for a long time. If my sales are down, it would make no sense to hire more employees to manufacture more stuff now, not until demand for my products rose would it make sense. The only prudent thing for me to do as a business owner would be to cut my expenses, and perhaps even reduce employees now until demand rose. And it would therefore not make any more sense for government to pay me to do what would be stupid for me to do on my own. No wonder the government is known to do stupid things.

1 Reply

@okie,

okie wrote:

I have run a business for a long time.

I don't know that this is true, but I'll roll with it since it doesn't affect the argument.

okie wrote:

If my sales are down, it would make no sense to hire more employees to manufacture more stuff now, not until demand for my products rose would it make sense. The only prudent thing for me to do as a business owner would be to cut my expenses, and perhaps even reduce employees now until demand rose.

This is a perfectly good approach for one agent whose money gets tight, be it a business or an individual: Cut your expenses, or generate more income, or both. But for the American economy as a whole, your approach fails because one person's expense is another person's income. We cannot all earn more or and expend less when the earners and the spenders are the same people.

1 Reply

@hawkeye10,

If you had watched Wall Street Week during the 1980s, you would have seen talking head after talking head discussing the coming of the service economy.

People have always faked "predictions." Can you say engineering, boys and girls?

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Where is the US economy headed?

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