Why the Stimulus Efforts Are Failing

[Steve R.]

In a sense this is a follow-up to the post: Tax Cuts Do Not Stimulate Economic Growth In that post I wrote: "Time to divorce tax policy from economic policy."

This past Thursday, August 16, 2012, CNBC had an interview with Henry Blodget (Businss Insider CEO) were he stated that the economic growth is stagnating due to the lack of consumer demand. Three Things the Economy Needs. Note that Blodget places the economic malaise not onto tax policy, but onto the lack of consumer demand. Both CNBC and Fox News have repeatedly interviewed economist who have discussed the lack of consumer demand. But this concept has yet to gain traction with the public. The lack of consumer demand is a companion theme to my tax theme for why the economy is sputtering rather than growing.

 

[Lightwave]

As I said in the other post

My opinion is that long term growth and wealth is the result of intelligent investment that results in efficiencies and not simply in increasing the level of spend. Significant amounts of consumer spending is on luxury goods that are simply not required. Third family cars / flat screen televisions / holidays.

Similarly stimulation through Quantitative Easing and other monetary manipulations are simply an alterations of the fiscal base and make little difference to investment in required goods.

Lack of consumer demand is thus an outcome of a succesful economy and not the driving force of a succesful economy.

What came first the Chinese spending increasing amounts on luxury goods or them developing the most efficient factories in the world.

I think we are headed for quite a change in the next ten years but time will tell. In part due to the world hitting peak oil. We've had it good for a long time.

 

[Fifty2One]

People just need to rethink need vs greed

 

[Beruthialscat]

Lightwave: "Lack of consumer demand is thus an outcome of a succesful economy and not the driving force of a succesful economy."
You are surely mistaken all succesful economies produces higher demand. There are no examples I know of where a succesful economy has resulted in lower demand.

"What came first the Chinese spending increasing amounts on luxury goods or them developing the most efficient factories in the world."
So you are saying that a more succesful economy increased demand isn't that a complete contradiction of the earlier point.

Oh and by the way Chinese factories would have to double productivity overnight to become as productive as the US.

Final point. It must be of much use to be able to see into the futureas you say " In part due to the world hitting peak oil." When is that happening. It has not happened yet and id love some oil futures for after peak oil.

 

[Rx_]

Inflation (debt spending) is simply Taxation
The term "stimulus" is a bad word that really means "debt".
Inflation (printing of money out of thin-air) is taxation. It is a hidden taxation mainly on the working class. The Federal Reserve (a private company with a printing press) prints to support government debt. The mythical "stimulus" is just debt. With more money, labor is worth less, goods and services are worth less, and resources are grossly mis-directed. Bankers get a huge cut up-front and can hire lobbies to spin it as something "good".
This is "inflation adjusted" debt, not just dollars.
No company can plan in this environment. Non of you can plan in this environment. History doesn't provide a happy ending for charts like this.
Taxing the rich (Over $70,000 a year income) at 100% won't solve this spending (debt) curve.

So, our new Treasury is an ex Goldman Sacs Executive (too big to fail) who took a huge bonus from the taxpayer bailout. Goldman even gave him a big bonus for becoming Treasury. His job is to Stimulate Banks with money printed out of thin air. Does the new Treasure really represent any of you?

 

[Steve R.]

It's too late here for a full reply. I've been contemplating a sequester post. Here is one that I recently put together: Obama's Manufactured Sequester Armageddon. Basically, the sequester is a slight reduction in proposed increased spending.

Let me phrase it this way. This year you hypothetically spent $100.00, next year you plan to spend $110.00. As a result of the sequester, your proposed spending is now reduced to $105.00 which is still more $5.00 more!!!!.

For Obama to spread mass hysteria and financial Armageddon is very irresponsible.

 

[Vassago]

He's a puppet for the corporations that feed him and his party, just like the Republicans, no different than the rest of Congress. While they keep hoarding money offshore to avoid taxes, the bills fall on the rest of us while our country falls further into debt. Part of this is why a Fair Tax makes so much more sense. Hiding money offshore or only making money off of your interest like Romney won't completely keep you from paying your taxes.

 

[Rx_]

John F. Kennedy (some called a Liberal) cut subsidy to corporations and in return cut corporate income tax in half. That did a couple of things. It brought all the cash back to the US to invest in creation. It took two years, and resulted in a huge increase in tax revenue. Of course, many mis-informed citizens didn't see the economic boom until a different president was elected.
Kennedy, like Jimmy Carter wanted to abolish the Federal Reserve because it is a relic of past banker mis-management. Carter survived his term battered with the Feds policy of 20% interest rates as political punishment.
We are now in an era of "print or die", until of course the paper currencies die. This will be the 4th US paper currency to be printed into worthless. It is just a cycle.
The good news is that like Iceland, once we give up the religious belief that paper money in the hands of a monopoly has any value, there will be much better economic times that favor the working class rather than the financial class.
There is nothing new here. It is just an age old cycle playing out the game again. In four generations, they will forget what we will all soon experience. It starts again.

 

[Steve R.]

Segue to Kennedy. A famous Kennedy quote: "My fellow Americans, ask not what your country can do for you, ask what you can do for your country." Under Obama the viewpoint, of my fellow Americans, is now "What can the government provide me."

Following up on Kennedy's space vision; there was a guest editorial "Victory Lapse" by Edward M. Lerner in the May 2013 issue of Analog, Science Fiction and Fact lamenting the decline of our space program which is cloaked through the "celebration" of past accomplishments. Each of these "celebrations" is really a funeral service. The US has lost the vision that Kennedy gave us. To paraphrase Star Trek: "To boldly go where no man has gone before". Now we are mired in paralysis by timid self-serving politicians lacking vision who have forgotten what working in the National interest means.

 

[Vassago]

Only in today's world, you are far less to survive it.