PeakTrader.com

[administrator]

PeakTrader said...

Mark Thoma:

"I also think that saving will be higher and, hence, consumption will be lower—the question is what will replace the lost consumption. I don’t expect net exports to grow enough to make up the difference, government will grow some, but that won’t be enough either, so that leaves investment. But investment in what? That’s the trillion dollar question."

In the U.S., taxes will replace consumption or saving/investment. Also, saving will be squandered on government-led investments. However, demand for commodities, e.g. food, oil, copper, etc., will remain strong, because developing economies will continue to expand at faster rates than developed economies.

Given Americans haven't saved enough for retirement, taxes will rise, and Social Security will be cut, more speculative investments may take place (e.g. biotech or alternative energy). Anyway, Americans will be forced to work longer, which will add to future economic growth, ceteris paribus.

------------

grant said...

PT? I have been going through your previous mention on immigration and is this stunning stuff.The civil war did not affect the birthrate measureabley in modern history. So I don't agree with you on that. This is a deep seated problem and and taking time to research but it is absolutely riveting stuff.

----------

PeakTrader said...

Grant, a significant proportion of the U.S. population died in the Civil War (from war and disease). An even larger percentage were males, and an even larger proportion were young males (Also, during the Great Depression, the birth rate declined).

American Civil War
Wikipedia:

"Based on 1860 census figures, 8% of all white males aged 13 to 43 died in the war, including 6% in the North and an extraordinary 18% in the South."

-------------

PeakTrader said...

I stated before, in the 2000s, Wall Street created and captured enormous real wealth in the global economy, distributed that wealth to the U.S. masses, and diversified the risk globally.

It's possible, the stock market rally over the past year did more to spur economic growth than monetary and fiscal policies.

Also, I stated before, the U.S. has been a "black hole" in the global economy, attracting imports and capital. However, the U.S. government has been a black hole in the U.S. economy, and it's becoming more powerful.

---------------

MP:

Reminds me of the story about Milton Friedman (from Steve Moore) traveling to Asia in the 1960s and visiting a worksite where a new canal was being built. Friedman was shocked to see that instead of modern tractors and earth-mover equipment the workers instead were using small shovels. Milton asked a government bureaucrat why there were so few machines, and the bureaucrat replied: 'You don't understand. This is a jobs program.' To which Milton Friedman replied: 'Oh, I thought you were trying to build a canal. If it's jobs you want, then you should give these workers spoons, not shovels.'"

Related Article:

http://online.wsj.com/article/SB124355131075164361.html