No not that one... never fear the moron-fest still continues...
Story at CNBC here.
And while Fischer avoided the phrase "secular stagnation" in his Monday speech, Minneapolis Fed President Narayana Kocherlakota is planning to host a November symposium that directly addresses the issue of secular stagnation by name, CNBC has learned.
I guess this "theory" we are supposed to be all impressed with is termed "secular stagnation" [Ed: Ooooooh! Sounds impressive!] within the academy of economics.
Hey morons in the academy of economics, if you look at the chart below, when we run things so that the blue bars go up year-over-year we get growth; and when we run things so that the blue bars are all the same size or smaller year-over-year we get "stagnation".
Ok now some spoon feeding for the morons: Make the blue bars go up just a teensy-weensy bit YoY (like what we did during the last decade you brain-dead, unqualified, libertarian morons) and we'll get some decent growth for a change.
9 comments:
It is possible that the US is entering a period of "secular stagnation" in the sense of a higher "normal" rate of UE, owning to the global fungibility of labor, a chronic trade deficit, and technological innovation that is increasing productivity, meaning that fewer workers are needed. The private sector may be producing fewer jobs going forward than needed for "full employment" in the private sector that doesn't leave millions out.
This leaves either the government as employer of last resort, increased govern spending on public investment or welfare, or a revised view of work, or some combo thereof.
The only problem is the rigidity of the mindset for dealing with it.
"the rigidity of the mindset"
Well Tom that is imo where the libertarianism (anti-authority administered via govt) comes in...
And to take them in order:
1. employer of last resort (makes blue bar go up...)
2. increased govt spending on public investment or welfare (makes blue bar go up)
3. or a revised view of work (makes blue bar go up if the new policy means earlier public funded retirements)
We have to "turn up the dial" as indicated by these blue bars to get some growth back, 'the invisible hand' (another disgraceful economic "theory" so-called) isnt going to do it....
rsp,
The "invisible hand" is the assumption of general equilibrium in which all markets, including the labor market, clear in the long run with all factors receiving the "just deserts" in terms marginal product.
The concern with "secular stagnation" is that owing to distortions markets won't clear without creating a cyclical bubble economy.
Well Tom if the one year the govt will pay/lend at $200 psf for housing and the next year they drop that to $125 psf then you're definitely going to get some cyclicality in your economy....
rsp,
Remember these people think that government needs to tax or borrow to fund itself. Of course, it's bonkers but that is the prevalent thinking and conventional macro and economic policy are based on this.
Until TPTB figure out that the government balance is identical with the nongovernment balance, and that only government can change the amount of $NFA, we are screwed.
But even if that were the case, the what and how are still political choices. Look at the recent crisis. The "essential" firms got preferential treatment "to save the system" while everyone else got hung out to dry. That was a political choice, and a cynical one.
As a country (society), the US needs first to first recognize the reality and then make political choices within the available policy space.
The overarching issue really about policy space and how to use it to best advantage for public purpose. At present, the policy space available is unrecognized and even denied, so there is no question of using it as beneficially as possible for public purpose.
Congratulations to Matt for taking the p*ss out of “secular stagnation”. I’m as unimpressed by it as I was by the phrase “weapons of mass destruction” before the Iraq war.
I’ve got doubts about Tom’s idea that SS might be caused by “the global fungibility of labor, a chronic trade deficit, and technological innovation that is increasing productivity, meaning that fewer workers are needed.”
Re the chronic trade deficit, that just stems from demand worldwide for US dollars. If the US can get real goods from other countries in exchange for bits of paper, then great. Any one who is willing to send me valuable stuff in exchange for the IOUs that I turn out on my desktop printer, please get in touch.
Re “technological innovation” I agree that any big change in the pattern of demand for labour tends to raise the equilibrium unemployment level, i.e. NAIRU. But that apart, I don’t agree that technology causes unemployment: that’s the old Luddite argument, isn't it?
"Re the chronic trade deficit, that just stems from demand worldwide for US dollars. If the US can get real goods from other countries in exchange for bits of paper, then great. Any one who is willing to send me valuable stuff in exchange for the IOUs that I turn out on my desktop printer, please get in touch."
Yes, but without a government offset that bleeds domestic jobs to embedded labor that is imported.
Same with increased productivity owing to innovation the gains of which are hoarded by capital and not passed through to labor, affecting incomes, hence, demand.
Government can offset this, but economists don't seem to realize this or don't want to say it. So the presumption is that bubble have to be generated to simulate credit creation by the private sector, which eventually leads to busts as debts cannot be repaid.
Government pays one way of the other — either by offsets that prevent the problem or bailouts that rescue the perps because "they are indispensable to the system."
The goverment offset is just another expression standing for: let goverment spend freely until the economy gets full employment.
Today Japan announced a Q2 contraction in GDP, due to a recent sales tax increase.
The ruling elites - be it in the US of A, the EU or Japan - are persisting in their destructive economic policies.
Only the Chinese seem to be getting it right - and keep growing at high rates as a result.
The Fed is "scared" by the thought that a tail can't wag it's dog?
Am I the only one who finds this whole discussion spurious?
Our electorate's view of the Fed in our national context is the primary issue.
It's a tool. Until we use it, instead of letting it use us ... we're kidding ourselves.
Haven't heard anyone state this more cogently than CH Douglas
“the present pre‐occupation of the financial system is to hide the enormous capacity for output which modern methods have placed at our disposal” (Douglas 1922)."
http://spontaneousgenerations.library.utoronto.ca/index.php/SpontaneousGenerations/article/viewFile/978/1106
That should help put maintenance of our constant Output Gap into perspective, as an outright act of sabotage against our nation, by financial institutions. In other words, treason.
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