PeakTrader.com

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PeakTrader said...
The U.S. dollar as the world's reserve currency and the ability of the U.S. economy to expand with huge negative net exports (which no other country or group of countries can challenge) allow the U.S. to expand its global economic and military empire.

It seems, the U.S. can consume more than produce at least 3% of GDP indefinitely (through inflation, interest rates, and currency exchange rates). So, foreigners are paying most of the U.S. military budgets.

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PeakTrader said...
The Obama "recovery" has placed us on a slow track U-shaped recovery, where the U.S. is prevented from reaching full employment until 2016 or 2017.

Given the U.S. has never had a 10-year expansion without a recession, there may be another recession before we reach full employment.

Obama stated we can't afford another bubble (he uses "can't afford" many times, most recently on under-education). We may end up with the opposite of a bubble.

Obama's economic policies are almost the opposite of Reagan's policies, which generated a real V-shaped recovery and a long-lasting period of prosperity.

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PeakTrader said...
Without responding to false assumptions, anyone who believes inflation (reflected in the general price level) has been understated needs to look at the real economy. Real wages have been flat since the mid-'60s. Yet, a typical individual can purchase much more with one months income today than in the mid-'60s. Real wages have been flat, because inflation has been overstated.

https://www.blogger.com/comment.g?blogID=28997633&postID=5542715307407632362

PeakTrader said...

I doubt "most average joes" add-up how much they actually pay in taxes and how much regulations actually cost them. Then estimate how much more they're destined to pay in the future.

And then stop to think that if it weren't for private businesses offsetting part of the high price of government, they would've joined something like the Tea Party long ago.

The huge fiscal spending spree the past 1 1/2 years didn't generate enough growth (or perhaps offset the Fed's quantitative easing). So, what will government do for an encore? The longer this weak recovery goes on, the worse it gets (and it's even weaker, perhaps till mid-'11).

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The best stimulus? Spend less, borrow less
June 25, 2010

Allan Meltzer's half-century as a distinguished monetarist -- advising Presidents Kennedy and Reagan, producing celebrated books on John Maynard Keynes and the history of the Federal Reserve.

"If Obama announced a strategy to deal with the long-term debt and stopped doing things to increase the uncertainty that businesses face, it would do a great deal to stimulate the economy," declares the 82-year old Meltzer.

Meltzer is right, and most of the "experts" -- from Paul Krugman to Ben Bernanke -- are wrong. The best stimulus is a solid, credible plan to radically reduce government spending, starting right now.

"Keynes championed temporary deficits to stimulate consumption during recessions," says Steve Hanke, an economist at Johns Hopkins. "But he also insisted that deficits disappear during recoveries, so that budgets would be balanced or in surplus during most of the business cycle."

Today, the administration is pursuing a totally different policy. It's sharply raising expenditures when the U.S. already faces gigantic, chronic deficits that barely shrink even in a recovery, and burgeoning debt.

"Keynes specifically warned against structural deficits when both U.S. and British economists were pushing for them at the end of World War II," says Meltzer. "He never said that more spending on top of chronic deficits was a stimulus. Just the opposite, in fact."

The confidence factor

Right now, many investors and managers are simply terrified by the absence of a roadmap to avoid ruinous debt. "We need to know that Washington can make tough choices, that our leaders are willing to do things that are unpopular," says Paul Willen, an economics professor at MIT. "More than anything, people need to feel that this is not out of control."