JP Hochbaum
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"And in any case to keep growing at about 2% credit expansion has to overcome the demand leakages and climb the hill of the automatic fiscal stabilizers as with the current institutional structure nominal growth automatically reduces the contribution of govt deficit spending, which is now maybe down to 4% of GDP. Note that with forecasts of 2% growth the forecast for the govt deficit spending falls to only 2% of GDP, implying far more rapid increases of ‘borrowing to spend’ in the domestic sector. And if that net new borrowing doesn’t materialize, the sales don’t either.
Is it possible for housing related credit expansion to suddenly accelerate? Sure, but is it likely, especially in the face of the drag the govt layoffs and tax increases that made the hill the domestic credit expansion needs to climb that much steeper? And sure, the foreign sector could suddenly spend that much more of its income in the US, but is a US export boom likely in the current anemic global economy? I wouldn’t bet on it."
The Center of the Universe
In laymen terms: If the private sector doesn't increase spending, via credit, the 2% growth we average won't maintain.
Why do increases in private sector spending have to come from credit? Why not increased wages, or tax cuts?
Why do increases in private sector spending have to come from credit? Why not increased wages, or tax cuts?
"In laymen terms: If the private sector doesn't increase spending, via credit, the 2% growth we average won't maintain.
Increasing velocity won't work, rich people would magically have to decide one day to start giving money away for no reason.They don't and wages do not have to go up or taxes down for it to happen either. Velocity would just need to increase, but it isn't going to happen.
Our population growth is near 3%, aiming for 1-1.5% would actually be bad. Not to mention we need to target 5-6% in order to get back to full employment.The reality is that 1-1.5% annual growth of GDP is reasonable for a mature economy like ours.
Our population growth is near 3%, aiming for 1-1.5% would actually be bad. Not to mention we need to target 5-6% in order to get back to full employment.
Why do increases in private sector spending have to come from credit? Why not increased wages, or tax cuts?
Or here's a novel concept: How about saving money first, then buying stuff?
For that matter, how on earth is that going to solve any problems?Or here's a novel concept: How about saving money first, then buying stuff?
At the moment, taxes are useless anyway.The solution is too easy. Tell everyone that for the month of july there will be zero sales tax.
You'll have a lot more than 2% by the end of that.
How do you save currency without currency?
For that matter, how on earth is that going to solve any problems?
The government is still a household? Jesus, you'd think you'd have learned something by now.By helping households rebuild their balance sheets. They spent thirty years assuming more and more debt. Then the financial crisis came, exposing how vulnerable households really were. Now, five years later, we still have millions of homes underwater, people taking out eight-year auto loans, living from paycheck to paycheck, etc. Maybe it's time they learn to live within their means so we build a better foundation for our economy.
The government is still a household? Jesus, you'd think you'd have learned something by now.
The irrelevance of this post is astonishing.
You're right, I saw tax cuts and assumed this was a discussion on public budget.I was responding to imagep's Post #2 where he was referring to private sector spending.
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