> On Dec 17, 2015, at 10:52 AM, Kurt Feltenberger <xxxxxx@thepaw.org> wrote: > > The job and unemployment numbers are all smoke and mirrors; how can you have a recovery, or even a boom, when almost a third of the overall population is either unemployed (and many are no longer receiving benefits), under employed, or have wrangled their way onto disability to keep their head above water without cooking the books and cherry picking the numbers. When the 0.01% are happy is how we get this ‘recovery'. Remember this fundamental accounting identity: “all spending is someone else’s income”. When spending goes down income does as well. The numbers aren’t ‘smoke and mirrors’ but ARE complex, because the base numbers (unemployment rate, underemployment rate, U16, employment:population ratio etc) don’t take demographics into account. A part of the bad news in those numbers is due to the elephant in the room starting to pass out the ass-end of the python (ie: Baby Boomers are retiring and getting out of the workforce; they’re also getting older and more likely to actually be disabled) and a part is due to actual bad news (we have an economy driven by consumer demand, and 99.99% of the consumers haven’t seen real improvement in their earnings in decades. Also automation and the global economy have siphoned good jobs off to lower-labor-cost locales, leaving a largely service economy left which typically pays much more poorly) The only reason this hasn’t been a huge political and social problem until now is the dotcom boom, followed by the real estate boom, coupled with the advent in the late 70’s of MUCH easier access to cheap credit masked the fact that the economy was operating mostly on credit. Also the elephant was reaching the middle of the python, as the boomers entered their peak earning years. Remember that identity at the beginning: those boomers were buying houses and minivans and school supplied for the kids and teevees and computers, etc. To compound this, consumer goods plummeted in adjusted cost as manufacturing moved to low labor-cost countries and automation and the computer revolution has helped productivity continue it’s inexorable rise, so we were getting more for our decreasing incomes. When everything finally went tits up in 2008, people were forced to deleverage, meaning they concentrated on paying off debts rather than buying goods and services. When we’re busy paying off loans to banks we’re enriching the people who hold loans (mainly in the form of financial investments). Since the majority of financial investments are still held by a very small minority of consumers, when everyone moves to deleverage, ie pay down debt, only a very small minority of consumers are getting that money. Keynes greatest insight the LAST time we rode this rodeo was recognizing that when private enterprise deleverages, it’s up to the public sector to take up the slack, if you don’t want to have a depression. We sorta learned this lesson, and should have really learned it because that’s precisely what we did in WWII: ran ginormous government deficits and boosted the GDP to staggering heights, even if it was an incredibly wasteful way of doing it (building bombers, ships and tanks to send to war to be shot down, sunk and blown up is simply a more spectacular version of Keynes’ “employ people to dig holes, then fill them up again”. ) We softened the blow of paying back all those billions in the 50’s by being the world’s industrial superpower (But remember those Eisenhower-era tax rates? Up to 90 and 95% in some brackets? Also straight Keynsianism:paying down those deficits when the private sector has recovered). Deficit spending on things that *increase* the private share of the economy, like modernizing our electrical grid, repairing our roadways, dragging our railroads into the 21st century would have had a much better impact on the economy than what we did. Hell just dropping money from helicopters to consumers would have had a much better impact on the economy than what we did. This is precisely the aim of much of FDR’s New Deal. In the US we did that, somewhat, with quantitative easing and a variety of other measures, but because interest rates were at the zero lower bound, there’s very little that a central bank can do (as Paul Krugman has been saying, loudly for a very long time), whereas in Europe the central banks reverted to the austerity cure (“Everyone else is tightening their belts government should too!”) and as a result, for example, the current economic downturn in the UK has been longer and deeper than the Great Depression, and what’s been done to Greece, Spain and Portugal is criminal. entire generations have been blighted so that wealthy investors in Germany could be made whole: Privatized gains, socialized losses. Interest rates for US Treasuries, which are set by the buyers, mind you, not the government, have been at near zero for almost a decade. In real terms, even with the trifling level of inflation we have now, investors have been, essentially, paying the US taxpayer to lend us their money. We COULD have taken all that essentially free money and done useful things with it. Instead we got idiots who think the government should be run like a household budget (then cut taxes, which in household budget terms is responding to increased bills by cutting your hours at work). We propped up the stock market which made lots of money for…the 0.01%, who have hoovered up 97% of the economic gains of the last 8 years. Wanna know why your local economy sucks? It’s not because of those damned libberal commie Keynsian socialists, that’s for sure... -- Bruce Johnson University of Arizona College of Pharmacy Information Technology Group Institutions do not have opinions, merely customs
