by Warlock 28 Replies latest jw friends
The reason for this was their great spirit of cooperation, institutional change and progress embodied in the New Deal and other modern liberal ideals. I think that that era has constributed more to the global status of the US than any other period.
Ah America.
A song ahead of its time:
The government should learn to be frugal when the private sector is thriving.
Indeed governments should have, but they did not, and the bust is all the bigger because of it. But we are where we are and the best way out of this would be to cut spending and accept a very deep recession, in preference to the failure of nation states and international disorder.
I agree strongly with Slimboyfat. I think he hits the nail on the head. It is far better to take the hard lumps now and get it over with rather than an even worse collapse of the system. Let's face it, the largest player in the economy is the state, and it has the unique position of wielding far greater power than other players. When it screws up, it ruins the markets for everyone else.
The problem is that the "thriving" of the previous expansion was partly illusory. A great deal of the growth was in non productive centers. The most recent expansion has been led more by debt creation than previous ones. Even the expansion of the late 90's, which also had a strong credit component, was accompanied by strong productivity gains. It was more "real". However, some of the irreality became evident with the tech bubble bursting. There was excessive capital allocation in the sector. This was largely due to a market being awash in excess capital looking for a home. Compare the growth in money supply with GDP growth over the period, the former rose much more quickly than the latter. The reaction to the tech bubble bursting led to an even further relaxation in monetary policy and growth in the state's participation in the economy-very much in line with Keynesian economic doctrine. 9/11 only reinforced the loosening policy. The government took nearly an identical tack in the last recession as it is doing in this one, albeit at a smaller scale and with a smaller fiscal policy component.
The subsequent expansion after the end of the recession of the early 00's was nearly entirely credit led, with a root cause in the large central banks of the West. An undesirable side effect of credit led expansions is an increase in economic inequity. And again we saw the misallocation of capital in non productive activities. We now have a glut of housing, much more than we need and the retrenchment is continuing. A lot of the errors were initially hidden from plain site to most actors and analysts by the aggressive purchases of dollar denominated instruments by the sovereign wealth funds of Asian and oil producing nations, essentially they "soaked up" a lot of the excess and this hid the ills, but the shell game can only carry on so far, and foreign banks can only be expected to prop up the dollar with purchases only so much.
The current expansionary stance of the Federal reserve and the Federal government nearly guarantees that rather than a much needed, albeit painful, rebalance of the economy with capital allocation returning in line with reality, we will see a protracted crisis and the seeds being sown for a worse one, just as the response to the previous recession sowed the seeds for this one. However, it is very possible that the dollar may remain a safe haven for foreign entities for a time, if the recession is worse abroad. This will reduce the inflationary effects of the M growth but will increase foreign control over the American economy even more than it is currently. America seems to be the luckiest country in the world, doesn't it? Another nation would have long since collapsed in a Weimar Republic-like hyperinflationary scenario.
BTS
I don't know a dream that's not been shattered or not driven to its knees.
Why should I believe that doing nothing will prove effective? Do we have a precedent that lethargy really helps? That's what I call faith.
We have evidence. The recovery from the last really bad recession (US 1970s-1980s) was due to an aggressive reduction in the Federal budget and a historically tight monetary stance by the Federal Reserve. We had double digit interest rates approaching 20% in some cases in home lending. Congress and the President slashed government spending, briefly reversing a long term trend of greater and greater growth of the government budget as a percentage of the total economy. Austerity measures. The recovery was very strong and helped lay the foundation for more than 2 decades of economic growth with only mild brief recessions during the period. The relaxed policy of the last decade-plus combined with a strong growth in the least productive sector of the economy-the public one-has laid the foundation for the current debacle.
BTS
I think the 1980-1981 recession very well illustrates the efficiency of Keynesian economics, even when it was called differently at the time. What pulled America out of this recession was a combination of tax cuts and increased spending under Reagan. It was sold under the banner of limited government, but in fact was a disguised Keynesian policy.
If you're flat broke, it makes more sense to find a way to put gas in your car to get to a job interview, than to sit on the couch and watch cartoons. I could be wrong.
If you're flat broke, it makes more sense to find a way to put gas in your car to get to a job interview, than to sit on the couch and watch cartoons. I could be wrong.
Just use the extra 13 dollars that Lord Obama's gunna put in your unemployment check.
Republicans and opposed Americans have to find a way to work WITH this president or we are all going to end up in a pit. This isn't any time for partisan politics and hanging on every word of Rush and Ann.
Priest he is the Messiah, isn't he?
Kit
An adjustment in lifestyle will likely be necessary for many, but thankfully true happiness does not come from how much money you have - or how much you make.
Life flows from money. I find true happiness in making a living and providing for the ones I love. I am not happy when I cannot afford to take care of my responsibilites. It makes my stomach hurt and keeps me up at night. So please, quit it already with trying to enlighten me about money and happiness.
