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I have learned that politicians and the federal reserve are stupid as hell.
Growth comes from low taxes and low government spending. Expansion comes from savings and investment.
What do I see? The opposite. I see government expanding, more deficit spending, increased money supply, horrible growth, high unemployment, and an economy that is building up around very low interest rates which in a free market controlled interest rates which would be higher, we would have different sectors growing.
basically they are doubling down and growing even larger bubbles. Greenspan had rates down at 1% for a year or so and blew up a housing bubble.
I have learned that politicians and the federal reserve are stupid as hell.
Growth comes from low taxes and low government spending. Expansion comes from savings and investment.
What do I see? The opposite. I see government expanding, more deficit spending, increased money supply, horrible growth, high unemployment, and an economy that is building up around very low interest rates which in a free market controlled interest rates which would be higher, we would have different sectors growing.
basically they are doubling down and growing even larger bubbles. Greenspan had rates down at 1% for a year or so and blew up a housing bubble.
Just imagine what 5 years of rates at 0% will do?
It's a catch-22. Low rates are supposed to lead to more investment/expansion by companies who can borrow at low rates, build a new plant, hire more workers, etc. Unfortunately however, as we've seen in this economy, companies are NOT expanding. They are forcing their workers to do more with less, while these big corporations sit on huge piles of cash.
As far as the general public goes, low rates are good if you want to buy a home or refinance. However, the kicker is that low rates take away any incentive to save. I personally would love rates to go up to about 8-10%. I already have a home, and carry no debt. It'd be nice to earn more than a couple bucks of interest per year on what I have in the bank. Right now, it's impossible to make money with conservative investments like CD's or Money Market funds, because inflation is higher than current rates.
We're not going to see rates change significantly any time soon though.
It's a catch-22. Low rates are supposed to lead to more investment/expansion by companies who can borrow at low rates, build a new plant, hire more workers, etc. Unfortunately however, as we've seen in this economy, companies are NOT expanding. They are forcing their workers to do more with less, while these big corporations sit on huge piles of cash.
As far as the general public goes, low rates are good if you want to buy a home or refinance. However, the kicker is that low rates take away any incentive to save. I personally would love rates to go up to about 8-10%. I already have a home, and carry no debt. It'd be nice to earn more than a couple bucks of interest per year on what I have in the bank. Right now, it's impossible to make money with conservative investments like CD's or Money Market funds, because inflation is higher than current rates.
We're not going to see rates change significantly any time soon though.
Precisely. Companies are generally not expanding due to a lack of demand and an ability to get more output from existing resources. Once the productivity gains from existing resources are maxed out, expansion will have to occur to meet demand. When (or if) this happens is anyone's guess.
The low mortgage interest rates are good, at least on paper, but many decent prospective buyers that would have qualified before the crash can't get loans. The low rates are artificially goosing prices in some markets. In the hot areas, housing prices to household income ratios are also getting a bit too frothy. Meanwhile, bad areas like mine are still seeing price declines.
The long and short of it is the demand side of the equation still isn't there. Many consumers have had their incomes cut to the point that subsistence, not discretionary spending, is the focus. The government should have done aggressive demand-side stimulus when the recession. What we received was inadequate.
The current debate going on as to whether or not the long-term unemployed should have their benefits extended is related to this problem. Some argue they're lazy and lack reasons to look for a job. Others argue that there are few jobs available. Pope Francis recently discussed the dignity of work. A program that ties receiving unemployment compensation and other social payment programs to a job to do things currently being overlooked by many municipalities such as removing graffiti and litter, environmental improvement and park projects, transportation services for the elderly, childcare, etc., could be the bridge solution and provide dignity for those receiving assistance. People receiving unemployment compensation could spend 20 hrs per week in a work program and have the balance of the time to seek a full-time job. Daycare and training programs could be provided to those who lack sufficient skills or to look after those who are unable to work.
The Works Progress Administration (WPA), the Civilian Conservation Corps (CCC), and the Tennessee Valley Authority (TVA) put millions of the unemployed to work in the 1930s building public buildings, improving national and state parks, and building dams to control flooding and produce electricity. Maybe we need similar programs. There is certainly plenty of infrastructure in the US that needs repair and improvement.
The Works Progress Administration (WPA), the Civilian Conservation Corps (CCC), and the Tennessee Valley Authority (TVA) put millions of the unemployed to work in the 1930s building public buildings, improving national and state parks, and building dams to control flooding and produce electricity. Maybe we need similar programs. There is certainly plenty of infrastructure in the US that needs repair and improvement.
I once put that idea to a very Conservative friend of mine and he said "we dont need it - cant afford it".
Ever hear the expression "pig with lipstick?" The term applies. Don't let the lack of soup lines fool ya. That's what foodstamps are, for all intents and purposes. And...what is it? ..88 weeks of unemployment checks? Yikes.
Sorry, bud, but I have a background in American history, so I know what I'm talking about. 2008 was NOTHING like 1930, starting with the fact that in 2008 various parts of the country were affected to far different degrees whereas the Great Depression brought universal and unparalleled misery to the entire country.
I once put that idea to a very Conservative friend of mine and he said "we dont need it - cant afford it".
Conservatives always have excuses as to why things shouldn't change or be done differently.
The real issue is whether we can afford to NOT do something about the long-term unemployed and our decaying infrastructure.
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