Today, most pundits are growing increasingly concerned that we are headed for a “double dip” recession. I think this view is idiotic as the US “recovery” was in fact nothing more than a small bounce in economy activity within the context of a DEPRESSION.
Regardless, the stooges are out again in full force proclaiming that the US economy is in trouble again (duh), that the Stimulus high is wearing off (duh again) and that the only solution is to issue more Stimulus and money printing to stop another economic contraction (WHAT!?!).
Let’s be honest here. The money printing and Stimulus DIDN’T work last time. All it did was buy time. Indeed, from an economic perspective, the only thing the Feds can claim with any certainty is that the Stimulus produced a bunch of economic data points that were questionable in authenticity (GDP, inflation, employment, etc) many of which have since been revised lower (GDP again).
If the best evidence you can come up with for justifying Stimulus spending is a bunch of accounting gimmicks, why even bother spending the money at all? I mean, if you want to measure success by just fudging a bunch of numbers, why not SAVE the money and just crank out a bunch of nonsensical data from thin air?
Indeed, why not say that we’ve got 17% GDP growth and employment of 500%? Sure our economic researchers would lose all credibility, but they’re already doing that anyway, and at least by simply making stuff up we wouldn’t be ruining the US’s balance sheet and wasting money in the process.
This real issue with US economic policy today is that no one in a position of power actually has a clue how to address the structural issues in the US economy. Either that, or they willingly ignore the obvious for the sake of career risk, choosing instead to take a “wack a mole” approach to handling economic issues: applying the same solution (spend money) to every problem that raises its head.
The fact of the matter is that the US economy, on a structural basis, is BROKEN. Starting in the early ‘70s, we outsourced our manufacturing and began shifting to a services economy (particularly financial services). We also outsourced our wealth to Asia, OPEC, and Wall Street.
Because of this, the average American has seen his income dramatically in the last 30 years. This is obvious to anyone with a functioning brain. Forty years ago one parent worked and people got by. Today both parents work (if they can find jobs) and still can’t have a decent quality life.
THESE are the items that matter for economic growth: jobs and income. If you want people to have money for them to spend and consequently boost economic growth, they need to have decent jobs that pay them well.
However, instead of focusing on these factors, the pundits and powers that be focus on peripheral issues like stock market levels and housing prices. Don’t get me wrong, these two markets matter in terms of retirement and savings (they’re the two largest stores of wealth for most approaching retirement). But people don’t pay for goods and services using stock gains or home equity (at least not since the Housing bust).
No, people pay for things using money they make from their jobs.
Tax credits, stock market manipulation, QE… all of these solutions address asset prices, but NONE of them address income growth: the primary source of funding people need to BUY assets. Put another way, all of the Feds’ efforts have been directed towards financial speculation NOT economic fundamentals.
Until this changes, the US economy is doomed. The consumer drives the US economy and the consumer’s income is the fuel. And we’re fast running out of gas.
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