[quote=FlyerInHi][quote=livinincali]
You’re arguing that the math doesn’t matter. You might be able to postpone the realization that the other side of the balance sheet holds nothing for awhile but eventually it’s going to matter. Of course there’s another crash baked into the current bubble and people are falling for it again. That’s what;s surprising to me. This unwavering faith in the fed having your back. It’s worthless to argue about it now, most won’t see it until it becomes hindsight.[/quote]
What other side of the Federal Reserve balance sheet? Please elaborate. Are you saying the assets are worthless or that there are unknown liabilities?
Let’s look at the math.
Scenario 1:
– Say prior to recession peak GDP was 1.0.
– 2008 Great Recession occurred and GDP hit a low of .90.
– After government intervention, GDP is now 1.1. Success!!
Scenario 2:
– Had the government not intervened, GDP may have dropped to a depression low of .70. Terrible suffering and drop in standard of living.
– Digging ourselves out the depression, we may have experienced faster growth and are now at .95.
Scenario 2 is clearly less appealing to the country and represents self-inflicted pain. I doubt anyone is glutton for punishment.
So what if an other recession is baked into government intervention? Does it matter? So long as GPD remains above .95 + some annual growth (all else being equal, of course), then government intervention was clearly preferable.
The government’s job is to protect and improve our aggregate standard of living.[/quote]
No, I’m sorry brian, but the *type* of growth does matter. And if it’s the government’s job to protect and improve our standard of living why are so many people worse off today than they were ~30+ years ago, before TRILLIONS of dollars have been pushed into the system in order to manipulate things one way or another.
The wealthy are better off today, but most workers are not. This fully planned economic event (the Great Recession, and even the stock market bubble, IMO) has been extremely damaging to our economy, and it was all *caused* by Fed/govt manipulations. If the Fed were to stop working for the speculators and asset traders, we would all be better off (except, perhaps for those traders/speculators), IMHO. What the Fed is creating is not sustainable growth; they have instituted a zero-sum economic system where everyone is forced to play, and most of us will end up the losers.
This is not success:
“(Reuters) – The gap between the richest Americans and the rest of the nation widened after the Great Recession, a survey by the Federal Reserve showed on Thursday, suggesting deepening U.S. income inequality.
Though incomes of the highest-earners rose, none of the groups analyzed by the Fed had regained their 2007 income levels by 2013, underscoring deep scars from the financial crisis and its aftermath.”
“To explore the question further, our study estimated a relationship for GDP per capita in which a change in income inequality was added to standard growth drivers such as physical and human capital. The idea was to test whether the change in income inequality over time has had a significant impact on GDP per capita on average across OECD countries, and if this influence differs according to whether inequality is measured in the lower or upper part of the distribution. The results show that the impact is invariably negative and statistically significant: a 1% increase in inequality lowers GDP by 0.6% to 1.1%. So, in OECD countries at least, higher levels of inequality can reduce GDP per capita. Moreover, the magnitude of the effect is similar, regardless of whether the rise in inequality takes place mainly in the upper or lower half of the distribution.”
