Trump Policy

[tw]

Originally Posted by Luce

That was a very interesting read.

Article, unfortunately, completely ignores the only thing that creates growth. Innovation. What we do today is obsolete technology in ten years - if growth exists.

1970s demonstrated the problem. We spent massive sums on things such as Vietnam and cost controls in the latter 1960s. Where were resulting products from all that work four and ten years later? Did not happen. So no growth occurred. To keep people employed, interest rates were kept low - so that companies could keep making profits on obsolete technologies. The world's third largest economic power (American owned overseas industries) were sold to maintain profits and claim growth on spread sheets - that did not exist.

That was a short term solution. We did not innovate like America once did in the 1950s and 1960s. So those low interest rates and selling assets created increased cash flows that grew massively while actual production did not. Spread sheets said everything was good when, in reality, the American economy was diminishing.

What resulted: too much money chasing too few products and productive activity. Stagflation resulted. Under both Nixon and Ford (and Fed chairman Burns), nobody had the balls to address excessive dollars chasing too little value and too few innovative products.

Jimmy Carter finally (actually Paul Volker) did that. So when did massive interest rates (exceeding 20%) finally fix the American economy? Not until Reagan's second term. It takes that long for economic inputs to result in productive (real world) results.

George Jr did same destructive actions. Things such as tax cuts, elimination of Glass-Stegal, and other money games in 2001 resulted in recessions in 2006. Fortunately we were not so stupid as to also invest SS funds in the stock market - as wacko extremist finance people were advocating back then. It could have been much worse.

In this case, an economic morass was created by too little money chasing economic activity - just like the 1929 Great Depression. Companies that could not meet their short term obligations (ie payrolls) would fire employees. We were facing 40% unemployment.

Fortunately we had people who actually understood the problem created by Cheney (George Jr), et al. (Cheney openly said deficits don't matter - a classic business school myth.) Sec of Treasury Paulsen (for George Jr) all but told wacko extremists to go masturbate. He, Bernanke, Geitner, et al understood that the economy needed cash only in specific (productive) locations.

Low interest rates would, unfortunately, enrich bean counters who created this problem. And pay for European vacations for the rich. Cash was directed only where 'motor oil would lubricate bearings'. That was Tarp and Quantitative Easing. That put cash into productive parts of this economy. And did not pay massively for European vacations and McMansions for the rich.

So many Americans are so anti-American (uneducated) as to believe soundbyte lies. The dumbest among us promoted a Tea Party. They had no idea how economics (and the above concepts) work. They were easily brainwashed by lies from Rush Limbaugh and Rick
Santelli (of CNBC - a business school graduate who demonstrated how dumb those people really are).

These solutions started before Obama was elected. First four years of Obama remained depressive - due to the legacy of George Jr. By addressing fundamental economic factors after 2006, the economy finally got back, in 2010, to where it was in 2001. We are still observing today the results of sound economic policies in and after 2010.

Sometimes an economy needs low interest rates to maintain short term economic activity. We recently saw that when leading indicators started showing a recession last year. Excessively low interest rates returned to keep people employed; hoping that it results in more innovation.

Unfortunately The Don's dic licking policies have caused massive damage to aluminum and steel industries, large number of agricultural industries (especially soybeans, apples, dairy, and other commodities), has stifle innovation in industries such as white appliances, railroad industries, and medical drugs. Is now being seen in many construction industries, and has resulted in maybe a 10% reduction of American exports. Worse, many American companies that once employed innovators to make future jobs (ie GM, Honeywell, white appliance manufacturers, General Electric, Sears) are selling assets to claim as profits. GE chalk and plastics, that once pioneered innovative products; it and more were all sold off to claim as profits. Those profits created today will be creating massive economic downturns in the next decade.

How bad have some industries become? Most automotive vehicles in America are manufactured by foreign companies. That was once how America got rich - owned the world's third largest industrial base before 1970.

Future economic disasters are currently being masked by low interest rates.

Remember the Fed's purpose. To maintain stable liquidity in conjunction with what is actually being produced. Fed never creates jobs, new products, new markets, or innovation. Fed can only produce sufficient cash to maintain economic activity, to not create inflation, and to provide short term cash flow (ie one and four years) so that growth can result in profits 10 and 20 years later. So that innovation is not stifled by too much or too little cash.

Fed does with liquidity what electric utilities do for electricity. Each only serve the economy.

To temporarily avert a recession, the Fed recently lowered interest rates to near negative numbers. If a recession gets worse, the Fed has few tools left to maintain economic stability.

Most everything above is little understood by so many only educated by soundbytes.

We know, for example, that tax cuts result in increased economic activity in a next year, no new innovations, and therefore economic downturns more than four years later. You cannot tell that to the uneducated (also called anti-Americans). They are educated by soundbytes from Fox News, Hannity, the Tea Party, and other extremists.

Only thing that makes economic growth are innovations; that happened four and ten years previously.

Anyone can make the spread sheets look good this year. Simply make it a law that all homeowners must tear up and replant their lawns annually. That will increase GDP. And result in recessions more than four years later. Only the uneducated (anti-Americans) will cite increased economic activity (more jobs) and call that good.

Unfortunately that article does not discuss this. We know it is incomplete. Because the only thing that creates increased productivity, new markets, more jobs, wealth, exports, increased productivity, diminishes poverty and welfare, etc is innovation. Spread sheets (ie bean counters) cannot measure innovation and the resulting increased value. Spread sheets only report on what makes a better economy, typically, four to ten years after it happened. That article should have, at least, implied that.

But then none of this can be found or explained in soundbytes. Which explains why it is too complicated for extremists - liberal and conservative.