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  Comments (1) Total Wednesday Apr. 16, 2014
It’s the Economy
Two For Thought

By Joe Carbonari

If the average American is strapped for cash — and we are — the demand for goods and services is too light to support the robust economy that is necessary to provide the standard of living that our society has come to expect. Our population continues to grow. Our economy must do so also. The severity of the Great Recession and its excesses has made this growth very difficult and a full recovery very slow in developing. Because the Recession was worldwide, our economy has been but slightly aided by demand from elsewhere.

Cutting expenditures has helped both private budgets and business ones, but it has also cut demand – so much so that even with the low interest rates the Federal Reserve has manipulated and maintained, businesses have not seen the level of demand necessary for them to invest in additional capacity and jobs.

The stimulus to demand, that is the spending on the unemployed and projects to employ them, by the federal government using low-interest borrowed money, was sufficient only to arrest the descent of the economy and lessen its severity. It has not been sufficient in magnitude to fully to get the economy firmly moving forward with the broad-based restoration of incomes that is necessary to sustain momentum.

We need to repair our base before we can start seriously cutting our debt.
By Tim Baldwin

Like politics, views on the economy vary: should we provide capital incentive to create jobs or should we provide spending incentive to create investment? Are both mutually exclusive or inclusive? These are questions experts debate and lay people try to understand on a macroeconomic level.

Certainly America’s economic conditions are complex and the formula of success is larger than any one perspective. Adding to the supply-demand formula, there are political factors that affect our economic growth as well, like:

• The Federal Reserve printing notes and creating debt dangerously disproportionate to our Gross National Product.

• Unreasonable and over-burdensome government regulations dis-incentivizing investment and increasing business costs.

• Taxes incentivizing making less, and thus spending less.

• Excessive entitlement programs dis-incentivizing ingenuity and motivation to create individual success.

Like politics, economics is a reflection of human nature. We need education, policies and politics that incentivize individual and collective improvement.

There is perhaps no simple cure with an economic and political system as complicated and diverse as America’s. One simply hopes that Americans simply understand that human nature and experience should be our guide, not party ideology or agenda, and we should require our politicians to keep that in mind when creating institutions and policy.
On 12-28-13, mooseberryinn commented....
Too bad, we are now a mere banana republic under the rule of the chairman.  It’s not going to get any better, but rather slowly decay to higher unemployment, inflation, and shortages of various commodities.  We have been transformed into the old soviet model of economics.
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