Home Forums Hunting & Shooting Hunter's Campfire Economy "Should Improve"

This.

Economic booms are almost always perpetuated by cheap credit. Macro-economies are all credit based in one way or another, but then there�s GDP that underpins the credit. The economic boom of the �90�s was because business figured out how to make money on the internet, and we saw the largest expansion of our economy ever. But understand much of that economic expansion was by the credit given to those who were invested in the .com�s, which fueled consumer spending. Then the next excuse for cheap credit was home based loans such as home equity loans. Lots of credit was given out cheaply for anyone who owned real estate, and again that fueled consumer spending.

I think the economy since the bust of 2008 is due to the fact that this is the first time in a few decades that we�ve had an economy that�s based purely on GDP and non-credit related consumer spending. What�s more, the consumers that fuel our economy are disappearing. Middle class are the big consumer spenders and the middle class has been shrinking for at least 15 years. So when the government infusion of the economy is finally over, we don�t really have anything but just plain GDP production that�s fueling our economy, so we shouldn�t be surprised that it�s moving at a snail�s pace. If the middle class continues to disappear, then we�ll hit a point of no-return and our economy will begin a very long phase of contraction as it tries to balance itself.

Barak Hoover Obama has a nice ring. The [bleep] POS couldn't make a lemonade stand profitable.

Well Said

You want them to include the cost of what people spend a majority of the money on in the inflation calculation? That is crazy, it would look bad if they did that.

Nicely written GunGeek. I appreciate the sentiment.

But I disagree with the last sentence. We began that long decline phase back in the 70s. We put it on steroids in the 80s. And we made it unanimous in the 90s.

You cannot build a healthy and sustainable economy on financial fever dreams and social media bullshit. When this nation turned its back on manufacturing and laid its gaze on things like finance and real estate the die was cast. Now our biggest export is entertainment.

When your economy depends more on the likes of Lady Gaga and Lindsey Lohan than the next door neighbor who works at (or rather "worked" at until we shipped his job overseas) the local saw mill, steel plant, and auto plant you are in a world of trouble.

At least IMvHO.

Will

vel, on the face of it, helicopter Ben (Bernanke) has failed to enlist enough helicopters to use in the shoveling of funds out to the poor and disaffected. if only he had tried harder.

point is, we no longer have an effective economic theory to guide us.

but we can sell crude oil to other nations. that should help. Russia is doing well selling natural gas to Europe and annexing countryside.

I hope we don't get caught up in a bidding war over Alaska.

Regurgitated ponzi schemes are not an economy, product manufacturing is.

Kent

And being the middleman for the world's product manufacturing to the US consumer base is a weak substitute.

Kent

My statement is only partially true. The decline will not be something you can put your finger on because politicians will refuse to acknowledge an America in decline, so they'll always look for some way to inject the economy with fake money to show some economic expansion. True, "real" wages have been flat since the '70's and are now actually beginning a decline.

Your assertion is that our economy be production driven by adding more manufacturing, but I say our economy is now, and always has been consumer driven. One can make a case for supply side or demand side (consumer) economics since either can drive an economy at any given time. But I personally think the more healthy economies are driven by demand rather than supply.

Despite the fact that manufacturing in the US has fallen, we're still the 2nd largest manufacturer in the world. China has surpassed us mostly because they make the cheap low quality crap that would never be profitable to make in the US.

Our economy has always been driven by consumer spending, that hasn't changed and it's not likely to change. The only way we're going to increase manufacturing in the US is to make it profitable to manufacture things in the US. But they need to be quality goods that are competitive on the world market. Such goods will provide quality jobs, which provide the working class with enough money that they can spend on consumer goods.

That's what people don't get about the income inequality thing. The left uses it as their call to arms to promote socialism. The right completely blows it off because it doesn't fit their world view.

But the income inequality (which is a symptom, not the disease) is pulling money away from consumer spending, which is taking away DEMAND for consumer goods. If demand falls, then production will have to fall until the supply/demand line balances. The disease of income inequality is the pooling of the power to set wages away from the worker and more toward the corporation. Wages needs to have a good balance between worker/corporation, just like the supply & demand line. But it's all on the side of the corporation these days, and wages are now in decline. The problem is, while that may be good for the corporation, it's bad for the overall macro economy...and eventually it will come back to hurt the corporation...it's a "circle of life" sort of thing.

If you try to shore up the economy on the supply side, you end up with companies that lose money because there's more supply then there is demand, so it's not sustainable. That's why I'm not a fan of supply side economics in general. (although there are times where it's advantageous).

These bubbles of cheap credit that fueled the economic growth of the 90's and early to mid 2000's fueled demand. Demand increased, but wages stagnated or went down. So when it was all done, the system is left unbalanced.

the mega-seaports either in operation or under construction tells me that the flow of goods & services are not going to slow anytime soon.

with 7 billion people, all hungry, more or less, somebody is going to attempt to feed them rather than risk getting gutted.

If it were only that simple...but I agree with your sentiment.

NAFTA and basically unregulated cheap imports have done away with the working class. Add to that our immigration and open borders (and of course the rampant greed today) there's not enough jobs to go around even to supply those aging into the work force!

Were headed for an era, when the baby boomer's can no longer work and of having nothing but an abundant supply of un-educated cheap labor with no real skills, and a country that will completely rely on imports.

Theres' no going back, theres' no solving the problem, at best theres' just slowing down the process!


Phil

This.

Kevin Phillips points out in his book �Bad Money, � for the last 30 years, financial services expanded from 11% to 21% of America's GDP while manufacturing fell from 25% to 13%. Wall Street big wigs rake in trillions trading inflated or nearly worthless securities that artificially increase in value at each stage. Lawmakers on the right are unwilling to fix it. Lawmakers on the left are unable. On the right, faith in the free market is absolute. On the left, integrity has been thoroughly compromised by political contributions.

and I would suggest it's all because of the lack of a viable economic policy (theory) that the mainstream can rally around. the middle class came from so many divergent directions, that they can't come together into a coherent whole.

NAFTA whether blamed on the demo's or republicans was a feeble attempt to keep foreigners on their own soil. we all know how well that worked.

but, what to do next, pray tell?

$4 a gallon gas for the last five years hasn't helped the economy either.

And that's what it all really boils down to. Both parties serve corporations, not Americans. And I'm not asking them to abandon corporations, just to represent both.

Thats' a global commodity; we have very little say in that price. Unless we were able to greatly decrease our demand...that would drive prices down.

The problem is an easy one. We have an economy based on consumer spending, and consumers aren't spending. That's easy.

Why are they not spending, that's easy also; they don't have extra disposable income.

What to do about it; that's the hard one. Because the solutions require both the left and the right to abandon their pre-conceived notions and political rhetoric in order to work toward a solution. THAT just ain't gonna happen!

Of course it's that simple, reality always is. Cheap credit wasn't an issue, unsubstantiated credit forced by the .gov into the housing market caused a bubble or ponzi, which when burst dramatically effected the supply economics nationally, joblessness and consumer spendable money.

The oil industry in ND and Texas have started to pull in national resources for manufactured product. Housing products are rising, starting to filter into the economy and jobs. If there is money to be made by investors they will spend, none of this gets done without huge private investment.

Sometimes the economy can carry on despite .gov or wallstreet... but it's very difficult when the economy is sabotaged by .gov agencies and regulations.

Kent

Somehow, somewhere, someone will have to walk out the door into the fields or jobsite, or plant, or energy field, or mines, or engineer and invest... a product for profit... times by a million...

To produce an economy.

Kent