Quote:
Originally Posted by Tyrone Slothrop
Aggregate demand is still down. Private demand hasn't picked up the slack. If you're fighting a big fire, you don't stop in the middle and say, "Well we tried putting water on it, but now we need to do something different -- let's use gasoline."
You say, "it's structural." What's structural? What's your solution? You don't have a bridge to anywhere. You're suggesting blowing up what we do have in the hopes that it will somehow incentivize people to build a new and better bridge.
We have lots of unemployed people. We don't have parts of the economy that can't find workers. If we had a structural problem, you would see slack demand in some parts of the economy, and insufficient supply elsewhere. But there's slack demand everywhere. Interest rates can't fall enough to get us back to full employment. That's a problem of aggregate demand, still.
And the federal increases in spending merely offset cuts at the state and local level. So we haven't actually tried stimulus.
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You really don't know anything beyond repeating this point, do you? How many times can I read this same non-response?
It's structural in that:
1. The cost of our labor is uncompetitive in a global marketplace;
2. Our workforce can't move due in large part to housing issues;
3. There is a mismatch in skills causing
a substantial portion of the unemployment rate;
4. The previous demand was credit based, and that is now gone, removing the primary structural engine of our growth from 2000 through 2007; and
5. We've a service based economy that
needs to reindustrialize to a degree, which is a huge undertaking.
I could go on about the effects of technology on our workforce, the long term dim outlook for housing, etc... But you get the point. It's not as simple as you suggest. The answer to every point made is not to repeat like a broken record, "We need the govt to step in and shore up demand!"
I don't have a bridge to anywhere; you're right. But what you're suggesting is pissing more money out the window to make the inevitable all the much worse when it comes. I get the "soft landing" argument. But when you blow a trillion to ensure a soft landing, I say that's enough. It isn't going to get much softer, and you're miles past the point where law of diminishing returns kicks in.
By the way, that they fucked up the first stimulus isn't an argument for a second. "Oh, we misallocated those trillion borrowed dollars. We need a another round." Madness.
