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Originally Posted by Undertoad
While we wait for the housing bust, predicted for the last three-four years now, and the interest rate bust, predicted for the last five-six years now, wages are now increasing (a lagging number in boom times!) and the economy has so far totally shrugged off the problem of higher fuel prices (which nobody predicted). ...
Because the economy is actually so complex that nobody can model the whole thing. Because nobody can accurately predict human and societal behavior.
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The housing bust was predicted only in the past year. Did it or will it happen? Ten years are not yet up? It takes four to ten years just to design anything. That means money spent today does not create economic benefit or resulting recession for at least four to ten years. Nixon spent wildly on Vietnam with money we did not have. Therefore we had a very active economy in the early 1970s with no growth. So when did a resulting recession start? Mid 1970s. Made worse because the Fed dithered - did not raise interests rates well above 10%.
We are again in that same Vietnam era economy. We spend wildly making short term thinkers hype a mythical growing economy even though no such grow appears in the stock market. IOW we are all just tearing up and replanting lawns - or fighting a war based on lies in Iraq - same thing. It makes the economy look strong to a neo-classical economist who only plays ‘money game’ economics. But when those investments should have resulted in profits four and more years later, that is when an existing recession finally causes job losses.
Meanwhile the economy is quite complex. Just like in the 1970s, the stock market predicted a resulting recession oscillating in between 700 and 1000 for the entire decade. No growth. All this while, Nixon proclaimed the economy as healthy citing the same numbers that UT cites as proof of growth.
For the past few years, eliminating a top 5% incoming numbers, and adjusting for inflation; the American income has decreased every year. This is a booming economy? These were also symptoms of a recession - deja vue post 1970. The American wage has been decreasing for the past few years. Inflation is above 2% - and increasing. Wage increases are less.