Discussion about the American Economy

10 posts

Abe de Ville

This thread is intended to discuss the abysmal state of the American economy. To wit, it's often stated in the many media that the economy is improving. It seems generally that no one of our ilk believes this to be the case. At best, it is a temporary recovery that will likely produce the same kind of speculation driven economic booms of the dot-com or real estate eras.

However, I actually believe that the US could have the ability theoretically to pull out of this situation. I say theoretically because the real issue doesn't seem to hinge on resources. If I recall correctly, the Marshall Plan in Europe, touted as a great success for redevelopment of a devastated realm, involved around 17 billion usd. Now I have no idea what that would be adjusted to today's dollars, but even accounting for that I presume that it would be far less than our annual budget deficits. What I'm saying is that we are routinely spending far more than a project which ostensibly restored Europe to prosperity in the postwar era, and what have we to show for it?

There are so many things that the government could do with this money. Take, just for an example, infrastructure. We have heard ad nauseam that this is in need of an overhaul. Railroads could realistically supply the future's mass transit needs, judging from all of the rail lines that were laid down from the 19th century to the present. Yet, do we ever even hear the government employees discuss this as an option? It seems there is an utter, utter lack of imagination at the top.

One thing I've noticed is that it seems that every spare dollar that would be available for 'civic projects', if you will, is captured by some special interest group before it has the ability to be allocated for some useful purpose. Add to this all of the as-yet-unfunded liabilities, and it seems all of the resources of the government are to be captured for the foreseeable future to come also.

What, if anything, can be done about this? Please add your thoughts, I know there are people here who will have some valuable opinions about this.

Niccolo and Donkey

That's the first thing all of them, from Japan to the US, are doing - investing in infrastructure, boosting aggregate demand. Because that's all they can do.

I think the real problem of modern economics, is that people don't really have the money to buy what they are producing. The disconnect between evergrowing diversity and amount of what's produced and the diminishing or flat capacity of modern man to actually purchase goods (as far as I remember, since 1960s the purchasing power in real dollars in many areas has actually decreased ) makes pretty much all western economies extremely dependent on cheap credit - as soon as credit becomes expensive, people will no longer buy a house, a car or plasma tv, a new laptop or a new washing machine.

Yes, you can build more plants, but who's going to buy what they'll produce? And what will they produce, that's not already being produced?

Is there market for anything left or are the manufacturers just racing to the bottom in all areas?

I can say for IT since I work there: despite the fact that PCs became personal less than 25 years ago, this business is no longer profitable enough, its dying on its own accord, a lot of top brands, including Dell, are moving out and entering enterprise sphere. Why? Diminishing returns. Its just not worth it, with such huge amount of competitors, to basically do this business anymore, manufacturing is growing many times faster than purchasing power and thus a crisis becomes inevitable, and the modern credit economy basically allowed to postpone the crisis, but it didn't really solve it.

There are several ways to alleviate or solve the problem: first one is well tested and well known - war. It destroys production facilities and artifically decreases the global agregate production rates thus decreasing competition - and the more disastrous the war, the better for economy, since everything becomes a deficite;

another solution that I can think off - we'll need to find new concepts of what makes value and what represents value because in the end the value of manufactured objects will become roughly equal to zero. Maybe manufactured goods will become completely free and the only market that will remain will be the market of ideas, objects d'art.

Or maybe even, the whole system will be overhauled, the capitalist system will be abolished in favour of a managerial democracy where basically X=Y, one's salary roughly equals the value of goods he produces.

One thing can be said for sure, the capitalist system as we have known it for the last 400 years, which is basically an economy of scarcity, is gasping its last breath in a world where too much of everything is a problem and productivity is increasing by the day.

Not enough money to keep up the GDP targets of Paul Krugman. Price deflation exists (as you've pointed out) and the economy adjusts. You can't sell what people won't buy (so prices drop) and then they can buy it.

I'm still waiting on my flying spaceship castle.


I'll say that the US economy has largely recovered from the 2006 real estate crash except that a few banks are still around that needed to be liquidated. The current poor performance is a result of all the other factors having gone sour or worse: More spending, more taxing, more regulation, bad trade deals, higher inflation.
Not being able to get any random shit that comes to your head doesn't really make our economy an economy of scarcity. We could pretty much cover the needs of the whole world in basic needs and even to a certain extent - in advanced ones. Instead we see artificial retardation of world development by capital, like agrobiz specifically not growing more crops to keep demand high.

But you must have come to Earth on one, because here the main way to buy stuff is through cheap credit, not through decreasing prices. Because wages are getting eaten by inflation faster than people get raises and faster than prices for products decrease. And wages themselves seem to stagnate over time even in real dollars in most jobs that have to do with manufacturing.

Yeah, because the crash itself had nothing to do with regulation.
I'm going to correct myself here. I think it's more correct to say we're at the start of a boom but it comes without a recovery.

Boom: Large corporations are sitting on piles of cash and have inflated share values. Banks are sitting on lots of money. Gov't spends like it can afford to.
No recovery: People are still broke and unemployed. Some are trying to pay down debts and de-leverage, while others don't bother improving their equity situation. Actual savings rates are still around 0-2%. Tax revenue isn't what it was/could have been.

Some reminiscing:



Consensus was a "tapering" of about $10 bringing the QE asset purchase program down to $75 billion from $85 billion. Peter was an idiot when his prediction of no cut in the program was presented to others. When he turned out to be right, he was nowhere in sight.
YouTube: https://www.youtube.com/embed/Tak9ODlBJgM


In Australia we love big new infrastructure projects, especially in my home state of Victoria. Cunts are building new massive freeways and rail lines etc all the time.

I have to say when I was in the States at the start of the year - albeit Northern California only - you really do notice how run down and shabby the infrastructure is.

Also, there was a vote held to decide whether or not to decrease the amount purchased through QE. The vote was 9 to 1 and the one against was no surprise.

In other news, the stock markets have been doing very well the last 2 years. That's since mid-2011, well after the rebound from the crash in late 2008. On Semptember 30, 2011, the S&P 500 index was at 1131.42. Today, it's at 1700. That's a 50% increase in 2 years. The inflation isn't in consumer goods. It's in the stock market and to some extent in commodities.