[quote=jpinpb]I read the highlights of it on Mish’s site.
I have to agree w/one thing Mish says. I really believe changing the corporate tax policies would be a good place to start, particularly those that encourage jobs overseas. We have lost too many jobs overseas. That was before the tech/stock bubble. That bubble just got replaced w/the r.e. bubble. People subsidized their income w/HELOCs.
I also tend to agree w/the baby boom dynamics. I think people are having less children. My grandparents had 5 to 8 children (on mom and dad’s side respectively). I used to think WWII is what pulled us out of the depression and maybe it helped, but I think it was b/c of manufacturing and the men who left their jobs to fight the war. Their absence allowed others to work. Regardless, we have wars going on and our economy isn’t doing too well. So that alone can’t be what will do it.
I really think it goes back to jobs. And w/the way COL is nowadays, I don’t mean just any job. Has to be good-paying jobs. Sadly, I don’t know of a jobs program that makes sense long term. The census jobs, for example, are temporary and I don’t consider them well-paying.
I used to think getting an education was key. But now I question that, also. Witness many educated people graduating and now having difficulty finding a job. Maybe that’s all a scam, too. I’m big on education. But also, I understand that historically, school made it possible for children to be out of the work force while men worked.[/quote]
In total agreement with everything you’ve stated, jpinpb.
From your link to Mish’s site, his quote:
The reality is stimulus money always runs out and priming the pump is nonsense. Japan has proven that in spades. What brought the US out of deflation was WWII.
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I contend that it is *deflation itself* ends the deflationary cycle (not wars — althouth the bombing of our competitors’ factories and infrastructure didn’t hurt our cause). At some point, the money that is still in existence will want to buy the assets, labor, etc. that deflation has allowed to reset to very tempting levels.
IMHO, Mish is right about our debt problems, but wrong about what he wants to target — govt programs and workers. Calculate Risk is right in that we need to focus on JOBS.
If we had spent trillions of dollars on jobs programs (infrastructure, medical technology, energy technology, etc.) instead of spending trillions trying to prop up asset prices, I think we’d be far closer to a **sustainable** recovery.
If we had done this, asset prices might now be at levels where investors and end-users would be moving in with more powerful money (much higher purchasing power) while trying to mitigate some of the damage to the job market during the deflation. Additionally, we would have had a chance to revamp our crumbling infrastructure and possibly make new discoveries WRT new energy and healthcare innovations that could benefit us for decades or centuries to come. We could have seen long-term benefits if we had invested in technology R&D and infrastructure improvements. As it stands, we’ve simply tossed massive amounts of money into the black hole that is our financial industry — nothing positive will have been gained for the long term, with only the massive growth in wealth disparity that resulted from our misguided attempts at asset price reflation.
I do not for a moment think that things would go to zero if we had let deflation run its course; at some point, even without govt interference, a floor is formed where prices will attract buyers and investors. IMHO, this is how we would be able to overcome both the problem of too much debt, and the unemployment problems.
A healthy economy relies on a delicate dance between private sector and public sector spending and restraint. Sometimes, the private sector will be a bigger part of the economic pie; then, the public sector should step in (without affecting prices!) in an effort to maintain the job base while the private sector rebalances and reorganizes into more productive endeavors.
