Where is the US economy headed?

@cicerone imposter,

As I wrote, the reason they have suffered only economic stagnation, and not a financial collapse, is precisely because the debt of their government is largely held by the Japanese people themselves, for whom it is an asset, .... and not by foreign governments and banks.

Cyclo and others make much about our even higher level of debt after WWII and the rapid economic growth that attended the years immediately after the war, as if to imply that huge public debts don't have adverse consequences. Apart from blithely ignoring the Greek situation, this view also ignores the fact that our WWII debt was, also like that of the Japanese, held by individual American citizens whose pent up consumer needs could readily be met by cashing in those bonds to buy the products of the world's then only remaining undamaged industrial base. The resulting explosion of private economic activity provided the tax revenues to discharge the accumulated debt withion a decade. Had we instead sold the bonds to (say) Australia, we would merely have fuelled an economic boom there and found ourselves mired in hight taxes and poverty.

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@georgeob1,

I'm not totally sold on that, George, because the US lent the European countries billions after WWII for their reconstruction and economic growth. They did it on borrowed money, and their economy grew at a pretty good rate, exceeding prewar GDP by huge amounts.

As I've stated earlier, the economy after WWII is much different than the economy of today, but the financing of debt from foreign countries isn't always a bad thing. Many variables are at play, and each country has its own strengths and weaknesses that change with the times.

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@cicerone imposter,

cicerone imposter wrote:

... but the financing of debt from foreign countries isn't always a bad thing.

It's certainly positive for Japan: 907.9 billions of dollars of the US treasury holdings are Japanese ...

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@Walter Hinteler,

For better or worse, it certainly keeps them connected with the US economy, and they are probably glad their holdings are not Greek treasury issues.

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@georgeob1,

georgeob1 wrote:

As I wrote, the reason they have suffered only economic stagnation, and not a financial collapse, is precisely because the debt of their government is largely held by the Japanese people themselves, for whom it is an asset, .... and not by foreign governments and banks.

The key difference is not who owns the debt, but who controls the currency. When Japan comes out of the liquidity trap, it could decrease its debt by inflating the currency, which is unpleasant to bond holders, but non-catastrophic for the whole system. Greece can't. Greece can only default---causing a run on the banks as soon as rumors of the impending default spread. I don't see how the ownership of the government debt would affect the stability of the financial system.

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@cicerone imposter,

cicerone imposter wrote:

I'm not totally sold on that, George, because the US lent the European countries billions after WWII for their reconstruction and economic growth. They did it on borrowed money, and their economy grew at a pretty good rate, exceeding prewar GDP by huge amounts.

Conversely, the capital exports to Europe didn't hurt the US at all. The 50s and 60s were a golden age of productivity growth for America, not to mention income equality.

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@Thomas,

Thomas wrote:

income equality.

Does income equality reflect responsibility equality?

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@Thomas,

Thomas wrote:

cicerone imposter wrote:
I'm not totally sold on that, George, because the US lent the European countries billions after WWII for their reconstruction and economic growth. They did it on borrowed money, and their economy grew at a pretty good rate, exceeding prewar GDP by huge amounts.

Conversely, the capital exports to Europe didn't hurt the US at all. The 50s and 60s were a golden age of productivity growth for America, not to mention income equality.

Who cares about income equality, or inequality?

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@Foofie,

You wouldn't understand macro-economics if your life depended on it.

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@cicerone imposter,

cicerone imposter wrote:

You wouldn't understand macro-economics if your life depended on it.

Sorry, that was part of my curriculum. I just do not care about inequalities of earnings, since the market sets our recompense. Everyone cannot have the same size slice of the proverbial pie. I do not begrudge those who have more than me, since I am not starving. That is all that matters to me; others resent those that have more discretionary income, since many cannot reconcile that a capitalistic system does not reward the unskilled greatly for their limited contribution to society. Your ad-hominem post above is just vitriol.

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@Foofie,

Foofie wrote:

Thomas wrote:

cicerone imposter wrote:
I'm not totally sold on that, George, because the US lent the European countries billions after WWII for their reconstruction and economic growth. They did it on borrowed money, and their economy grew at a pretty good rate, exceeding prewar GDP by huge amounts.

Conversely, the capital exports to Europe didn't hurt the US at all. The 50s and 60s were a golden age of productivity growth for America, not to mention income equality.

Who cares about income equality, or inequality?

That's my point.

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@Foofie,

You wrote,

Quote:

Who cares about income equality, or inequality?

Most reasoned people see the problems with how our economy is now enriching the top 10% of our population, while the middle class and the poor lose purchasing power and security.

I care about equality and inequality, because the pay and benefits are benefiting the rich more than everybody else, all while the GOP advocate for more tax cuts for the rich while the national debt continues to increase.

Yea, I care.

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@Foofie,

Foofie wrote:

Who cares about income equality, or inequality?

Everyone who fears the concentration of power in the hands of the rich, and everyone who thinks it's a shame that children can't get an education because their parents can't pay for it.

1 Reply

@cicerone imposter,

The GOP advocates tax cuts for everyone. The GOP advocates tax cuts to stimulate growth in private sector business.

The liberal left advocates tax hikes for everyone. The liberal left advocates raising taxes on the private sector, this will further destroy growth.

If you really care, you will not support anything the liberal left has planned for this country, you will support what the GOP advocates.

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@H2O MAN,

H2O MAN wrote:

Does income equality reflect responsibility equality?

Of course it does! When a child gets itself born to poor parents, that is its choice. The economic system is right to hold it fully responsible.

Sarcasm aside: Even if we didn't have the problem of people bequeathing their poverty to their children, lots of people end up rich through no virtue of their own, and lots of people end up poor through no fault of their own. To suggest otherwise is just a social-Darwinist restatement of the old Victorian hymn, All Things Bright and Beautiful:

The rich man in his castle,
The poor man at his gate,
He made them, high or lowly,
And ordered their estate.

Although laissez-faire capitalism is a useful baseline, not all things are bright and beautiful about it. We should get over the Victorian delusion that they are, and fix the parts that are broken. Excessive income inequality is one of those parts.

1 Reply

@Thomas,

I'm talking about taking responsibility for ones actions... working hard and working smart to earn as much income as possible.

Should the slacker share income equality with the diligent worker?

Hell no!

1 Reply

@H2O MAN,

H2O MAN wrote:

I'm talking about taking responsibility for ones actions... working hard and working smart to earn as much income as possible.

In this case, the answer to your question is "no". No, the extent of American income inequality greatly exceeds the differences in how hard and how smart people work. For example, there is no foundation in comparative productivity for the fact that Vikram Pandid, the CEO of Citibank, earned almost 1000 times the average American's compensation in 2008, when average Americans had to bail out his company.

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@Thomas,

You are wrong.

Working smarter includes negotiating a compensation package, not everyone can do this because not everyone is qualified to be a CEO or a sports star.

I fully support people earning as much as they possibly can in the free market. Change this and you will kill the desire and drive that creates highly taxed high wage earners and you will stifle/kill the economy.

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@H2O MAN,

It#s certainly smart to get others to bail out my company. And if you can convince them to like to that, what you, H2O man, obviously do, well, that's even smarter.

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@H2O MAN,

H2O MAN wrote:

I fully support people earning as much as they possibly can in the free market. Change this and you will kill the desire and drive that creates highly taxed high wage earners and you will stifle/kill the economy.

On this theory, the American economy should have been stifled between the presidencies of FDR and Eisenhower. The top marginal income tax rate was ninety percent then. Yet the American economy did just fine. Your theory, then, is flatly refuted by the economic data.

1 Reply

Where is the US economy headed?

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