With several months of solid jobs gains, and an unemployment rate that is holding steady, if not falling, it is beginning to seem obvious that companies and job creators will hire when the demand is there for their products. This in spite of all the GOP rhetoric in the last few years that the ONLY way to encourage job creation was further tax breaks for the top income earners and for corporations.
We are seeing, again, a refutation of Chicago-school supply-side economics. Now, I'm sure that our friends on the right will claim that the current economic turnaround is actually a vindication of the prudence of extending the Bush-era tax cuts, and that the stimulus was actually just a huge waste of money that has had little to no positive effect on the American economy.
Tell that to auto workers, infrastructure workers, and all the folks in those supply chains whose jobs were saved or created in large part by the stimulus.
The do-nothing Republican House has finally seem to come to the conclusion that stubbornness and entrenchment will not help them claim any credit. For anything. Indeed, if one intentionally does nothing, instead pandering to a failed philosophy that would ultimately result in no minimum wage, no social safety net, even more income inequality, and of course fewer rights for women, minorities, union workers and the LGBT community as a whole, one has nothing to take credit FOR.
May Keynesianism forever be the foundation of modern economic thought. That, and a judicious sprinkling of socialism :)
Don't worry. We will be like Greece soon enough. Keep the Kenesiasism thoughts of spending going. Look what happened to Greece, Spain, Italy, Portugal, Ireland, UK, ...
ReplyDeleteBesides you can spend all day when the government promises to pay you in dollars. The US will never default on its debt when it promises to pay in an object (dollars in this case) it can create in unlimited amounts.
But you say the Fed has not printed or created money. You are correct. They purchased "debt" from the US Federal Government. So the Federal Reserve opened its check book, gave some money to the US government and the US Government said I will pay you back. Great, because once the federal reserve gets paid back, either though selling the bonds on the open market or the US government pays the bonds off, the balance sheet declines and that money is effectively "destroyed" and taken out of circulation. We are all good at this point.
But ask your self this. What happens if no one but the Federal Reserve wants to buy US Treasury Bonds? At that point no one will be buying US Bonds (debt) at all, either from the Federal Reserve or from the US treasury. Hmmm guess who steps in to buy those bonds (Debt)? If no one does then we are like Greece, Spain, Italy, Portugal, ... If the Federal Reserve steps in you can rename the dollar menu at McDonalds the $100 dollar menu.
Just remember this: The dollar is based on the full faith and credit of the US government. Nothing more, nothing less. Do you trust your government that much?
Keynes has good ideas, but Hayek based his on reality. :) Socialism works until you run out of other peoples money.
It is a fact that fiscal austerity in times of economic crisis damages economies. While Greece's problems are somewhat similar to ours, systemically, their approach following the recession has been suicidal.
DeleteIt is a fact that the US has amply and repeatedly demonstrated in the past that a more progressive tax system neither hinders business creation nor hiring. This is why the unemployment rate typically follows economic prosperity (or lack thereof) and not changes to the tax code.
It is a fact that infrastructure, both legal and material, is the foundation of an economy's ability to achieve sustainable growth. This is why infrastructure improvement is one of the preferred methods for implementing stimulative economic policies, and it is also why the returns on infrastructure investment are so high relative to the outlays.
It is a fact that a large number of both individual and corporate taxpayers are able to use the existing tax code to avoid the payment of most taxes, if not all. Some are even able to receive massive subsidies and refunds in the process.
It is a fact that a company's board of directors has a fiduciary responsibility to achieve the highest returns for their shareholders. This is the primary reason why I am generally distrustful of a for-profit healthcare system. It is also why companies will impose layoffs during booms, and expand payrolls during busts.