Yup, John Boehner and Paul Ryan Are Right: The economy contracted in the fourth quarter because #spendingstheproblem and Keynesian Economics Doesn’t Work.
Construction has been one of the more encouraging sectors, adding jobs each of the last four months. The hiring there was probably because of a combination of rebuilding from Hurricane Sandy, unseasonably warm weather that led to fewer work stoppages, and the nascent housing recovery, said Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors.
Retailing, health care and the wholesale trade also added positions in January, while the government again shed jobs. Government payrolls have been shrinking most months over the last four years.
— Job Growth Is Steady Amid Snags Holding Back Economy, Catherine Rampell, New York Times, today
Bring on the sequester, I say! Let’s get that economy going again!
It is not sufficient that the economy merely grow. The economy has to grow in a sustainable way, and, right now, our money produces debt but little to no ROI, and, hence, it is not sustainable.
In Endgame, the End of the Debt Supercycle, the authors argue that the collapse will come because we don’t allow contractions, the normal small “forest fires” that take out dead wood that interferes with future growth. Instead, we guarantee one of those huge forest fires that the US regularly has while disorganized Mexico has a series of small fires but nothing on the scale of the US.
Keynes as applied half-way by pols is fine for a recession where inventory was produced into a contracting market because sales data was traditionally behind the market.
Inventories are built on borrowed money and, if there is enough borrowed money and enough inventory, the econ system can take a great hit.
There, increasing spending and lowering interest rates will work. It will prime the pump and get the economy going once again.
Keynes wanted interest rates to go back up along with taxes, but modern administrations never seem to feel the need to recoup the money spent, seeing it as interfering with “growth”.
What we have now is no recession. What we have is a depression in the sense that a restructuring of the economy will be necessary to create future sustainability.
In other words, there has to be a dramatic, substantial shift towards production and away from consumption in virtually all sectors of the economy.
That is extremely painful, and Obama’s grasp of “hope and change” and “shared sacrifice” was exactly what was needed.
Unfortunately, O’s actual personal powers are limited to a demagogue’s stances demonizing the opposition because he really doesn’t grasp the first thing about “community organizing”.
That would be, as Alinsky pointed out, not creating programs that the community doesn’t want, such as OCare because it creates an elite and doesn’t empower the community.
In every area, Obama has done exactly that, preferring his policies over the preferred policy choices of the people.
So, we are building a huge “deadwood timber reserve” for a massive conflagration- unfortunately.
Cameron
unfortunately I halfway agree with you. unfortunate because your logic is not compelling.
i don’t see how you can have “production” without consumption.
nor am i sure i like the concept of “deadwood” as it is usually applied to eliminating jobs and the people who do them without regard for what happens next.
there does not seem to be any guarantee that new jobs will be created to replace those lost, or that the workers displaced will be able to find those new jobs if they are created.
other than that, your argument is far too abstract to mean anything in the real world, and your remedies have a kind of fanatical edge to them that i hope we have learned to be leery of.
why don’t you give it more thought and come out with practical proposals, including how to get the President and his advisors to pay attention to them.
Of course you need production to have consumption.
What we have now is a Fed money print, a T-Bill shell game, where no real production funds our consumption.
So, until we produce enough to pay for our consumption, we are simply bankrupting the country.
And, by the way, Romney did get it. That is why spending cuts were to be introduced slowly to match production increases based on making more, a lot more, of whatever it is we consume right here.
Spending now increases our trade deficit, just as cutting taxes provides revenue to be invested abroad.
Restructuring is needed. New trade deals. New energy policies…
We had better bring back the “nationalism” of our economic system and not see it as an end in itself, or the nation will cease to pay able to pay for its existence.
When that happens, the rule of law that underpins the markets will be gone and a lot of wealth with it.
I have given two ideas already: increasing energy production even more and confronting the nations, such as China, who signed those bogus “free trade” agreements with us.
Green energy would be great if it were ready, but it isn’t.
Reducing med costs by taking on Big Pharma, basing insurance on risk, taking on malpractice suits, ending the ease with which specialists control prices in the health care market: all of that would lower costs in one-sixth of the economy, freeing up capital for investment in production or consumption.
More later. Good talking to you.
coberly, if you understand roy well enough to halfway agree with him, maybe you could enlighten me as to what he thinks is wrong and what should be done to correct it…
go easy on me, im kind of slow at understanding concepts such as “cutting taxes provides revenue to be invested abroad”
When Bush gave out all those tax cuts, do you actually think all that money got invested in the US?
Even when handed to “the people”, as consumers, it went abroad.
We’re symbiotically attached to China now. We’ll take them down with us.
Off to work.