- #1
JakeA
- 12
- 0
I don't have a lot of faith in it. His thinking, or at least that of his advisers, is that of a sort of neo-new deal. There's a couple of problems with this.
1. The new deal didn't work. It was military spending during WWI which eventually brought the US out of the depression.
2. Our governments already spend like madmen. In terms of government spending overall, there's really nowhere to go but down if you take state government spending into account. The point is that "the stimulus" will at best merely lessen the impact of decreased state budgets.
The really scary thing about this current downturn is that it's at the END of a government growth cycle, not the beginning like there was in the 1930s.
Here's a little bit of simple math:
1. Median annual income is about $40k.
2. I would say that of that, at least $20k goes towards either debt service, foreign purchases, or commodity purchases. For instance your house or rent payment can normally be tracked to debt services, say $1200 per month. Gas is a foreign purchase, so is most of the crap you buy from Walmart.
3. If you assume 50% net non American labor producing purchases, the sort of "natural" unemployment rate is 50%. That may sound like a staggering figure, but we're kind of already spiraling down towards that. If you take into account underemployed or people who have given up looking for a job, the rate is already close to 17%.
4. This calculation is in absence of debt creation, which we all know we're massively doing right now. We can't keep doing it forever, though. Once we stop propping up the labor market with borrowing, we're going to continue to spiral down towards the 50% figure.
1. The new deal didn't work. It was military spending during WWI which eventually brought the US out of the depression.
2. Our governments already spend like madmen. In terms of government spending overall, there's really nowhere to go but down if you take state government spending into account. The point is that "the stimulus" will at best merely lessen the impact of decreased state budgets.
The really scary thing about this current downturn is that it's at the END of a government growth cycle, not the beginning like there was in the 1930s.
Here's a little bit of simple math:
1. Median annual income is about $40k.
2. I would say that of that, at least $20k goes towards either debt service, foreign purchases, or commodity purchases. For instance your house or rent payment can normally be tracked to debt services, say $1200 per month. Gas is a foreign purchase, so is most of the crap you buy from Walmart.
3. If you assume 50% net non American labor producing purchases, the sort of "natural" unemployment rate is 50%. That may sound like a staggering figure, but we're kind of already spiraling down towards that. If you take into account underemployed or people who have given up looking for a job, the rate is already close to 17%.
4. This calculation is in absence of debt creation, which we all know we're massively doing right now. We can't keep doing it forever, though. Once we stop propping up the labor market with borrowing, we're going to continue to spiral down towards the 50% figure.