This post was being written when I came across Bruce's piece on this Athreya guy. For some real barn burners try his web page for sleeping tools. If this kind of stuff is what you come out of a PHD program spouting I'm glad I didn't go to college at all. My one venture into college economics was being taught by a dude who when asked to explain how the banking system worked replied he didn't know anything about the banking system. Never went back, I think I was lucky.
Now to get back to my original post you get to pick between the two linked commentators that today were saying the exact opposite things, one for stimulus one for austerity. I'll save my comments till after you read the two stories.
You get to choose between Paul Krugman an economist or Mish Shedlock an investment adviser. Krugman says we are in the 3rd Depression and if we are not to go deeper the one thing we don't need is an Austerity program. As you might have guessed ahead of time Shedlock is pushing for austerity programs and sites a Wall Street Poll that says 63% of Americans think controlling the deficit is more important than booting the economy. Which one do you think needs to go to stupid study (you do remember stupid study don't you?) In my high school days that's where the underachievers were sent.
The stage is set for this argument by the world governments showing huge budget deficits mostly do to the attempted bailout of funny money investments they got sucked into. Led down the road to hell by the US mortgage market aided and abetted by derivative markets and bad loans from banks at high interest that finally rise to the point of no return (they say) The only answer is a huge world wide Austerity program out to cut benefits for the working man by reducing his pension and health care benefits and ah hell let's cut their wages by 30%. No where in these proposed programs have I seen one word of the top end of the workplace taking any hits. Just us working folk,
You don't have to have a PHD in anything other than "Life on the Street" to know we are in deep trouble and incidentally led there by FED folks saying they don't see a bubble, but they do now see a recovery. They should really patent their magic bubble that nobody can see including them. But it would probably be denied because it was damned obvious to some.
There have been some interesting back and froths on my economic attempts on this blog but nobody has been the pompous ass this PHD is. To even site Elizabeth Warren as an amateur says it all for me. She has demonstrated time and again in her speeches and books why the middle class is suffering , but of course she isn't a PHD in economics (thank God or whomever)
It's my belief Economics is not hard if you approach it from the household level which I hold theory wise is no different the state, nation and world econ. What you and I can't do they can't do , the numbers are just bigger.
We have been sold ideas in the last 30 years that Globalization would rise all boats, maybe so but they didn't tell us our boat would have so many holes and that the bilge pump they gave us was made in China and had an expected run time of 15 minutes till it blew up.
I would suggest that folks like this PHD we should ignore. After all it was that kind that made the formulas that brought about the huge size of our current problem.
I know the whole world is facing the same thing but we are only going to focus on the US , the problem is big enough here. Notice please that the debt run up was either incurred on Republican watches or left by Republican problems that democrats thought they had to fix.
So here we are , deeply in debt and in the midst of the Third Depression (krugman) for which we need more stimulus spending or facing a huge Austerity program proposed by the (shedlocks ) of the world who want to cut social benefits, pensions, and wages. Some economists say we are in recovery, some say just a pause before the big down. You can manipulate numbers like Shedlock and the government to make bad look good (it really just hides) till you can't ignore it any more. For investment advisers and economists to use government numbers and try to compare depressions is a laughing matter , it's apples and oranges and cannot be compared unless you get the old formula and apply the new numbers. John Williams does just that and charts them for you, but you only get to see some of the data for free. Enough for any lunk head like me to figure out where we are going. You need to look at just a few numbers , unemployment of 22% and a drastic decrease in the all the m money supplies. No need to complicate the problem, if large numbers of people are not working and their physical assest are depreciating in value, there will be no recovery. Consumer spending is 70% of our GDP and too many have nothing left to spend.
But first where have we been and how do the presidents stack up on deficit spending>
It really doesn't matter much now who put us in the hole were in, all that matters is to stop digging the hole deeper, which sounds like I might be for austerity programs, I'm not. We proved all the austerity stuff didn't work in the Great Depression, we were in a modest recovery then too, till the deficit freaks got their way and drove us back into the hole again. This is where some give cred to the war got us out of the GD, and at this point in time that is right. I would suggest that we are already in two wars longer then any we have ever been in. Please don't tell me we have to have a 3rd to get out of this Depression.
What we really need is an army comprised solely of PHD's you pick the subject, mine choice are enonomists, send them all , give ole Elizabeth Warren a call and she'll tell you how to get out of this mess.