RealClearMarkets - Get Ready for 14 Percent Unemployment
Say it isn't so! This guy seems to claim that when the government wants to sell trillions in debt, somebody has to buy it! Wow, what a concept! It is really odd to me how when deficits were down in mere 100's of billions with Republicans in the WH, one heard a ton about how the government debt "crowded out" economic development, and how it was "unsustainable". There was some truth to that, but the reason it was never as bad as the MSM liked to make it at that time was the simple issue of SCALE!
If I tell you that I just spent $10K, the only way that number has any real meaning relative to how "serious" that is if you have some idea of my income/wealth. If I'm a college student with little income and little or no assets, then it is HUGE -- if I'm a 50 year old with a decent job, income, savings, it is "real money", but not "lifestyle changing" -- If I'm Warren Buffett, the relative financial impact is less than if you or I decide to buy a penny gumball (if there was such a thing anymore). The old $300B deficits on a $10T economy were about like the 50 year old case -- serious money, but not life changing. High Multi Trillion deficits on a now shrinking GDP are like the college student case -- code red, we are dead!!
The meaning of deficits is RELATIVE to the GDP of the country. The formerly "huge" deficits were all in the 2-4% range of usually quite healthy GDPs. NOW, we have WWII kinds of 60-80% to God knows where % of GDP without any war to blow up the production with!!! Which means that someone is going to have to BUY the "stuff" that gets bought/stimulated. Except none of this "stimulus" is going to people that buy stuff via less taxes or such, it is going to be spent by the Government for "something". But wait -- how are people going to be employed? In Government make-work jobs? How well do you suppose those will pay? and how much will those folks buy to stimulate the economy? Like basically zero ...
Now, it would be "nice" if China would just buy all our debt -- but then, we are going to have to be SURE to buy EVERYTHING from them so they have all that money to buy our debt. Therefore, NO JOBS!! The odd thing though is that a lot of the Americans that BO is certain are stupid rubes seem to be figuring that it might be better to just SAVE money!!! That actually IS a good idea for the economy long term, it just doesn't do anything to help short term unemployment. Especially when most of the savings is just going into all the government bonds that BO has to sell -- thus the very apt analogy of taking a bucket of water out of the Hudson river and then putting in back in at a different point. Getting a bigger bucket doesn't really do a hell of a lot.
The idea is to live on less than you make and INVEST the extra in something that goes up in value. Before BO and company decided to start buying up the worst of US industry and destroying the rest, that was usually STOCKS! Now it is most likely government bonds -- but unfortunately, those don't really do much to put people to work. At some point, somebody has to DO SOMETHING -- and that usually means risk/reward/competition/innovation/profits -- all that yucky stuff that BO hates.
So, we just tug on our bootstraps and watch the unemployment numbers rise.
Say it isn't so! This guy seems to claim that when the government wants to sell trillions in debt, somebody has to buy it! Wow, what a concept! It is really odd to me how when deficits were down in mere 100's of billions with Republicans in the WH, one heard a ton about how the government debt "crowded out" economic development, and how it was "unsustainable". There was some truth to that, but the reason it was never as bad as the MSM liked to make it at that time was the simple issue of SCALE!
If I tell you that I just spent $10K, the only way that number has any real meaning relative to how "serious" that is if you have some idea of my income/wealth. If I'm a college student with little income and little or no assets, then it is HUGE -- if I'm a 50 year old with a decent job, income, savings, it is "real money", but not "lifestyle changing" -- If I'm Warren Buffett, the relative financial impact is less than if you or I decide to buy a penny gumball (if there was such a thing anymore). The old $300B deficits on a $10T economy were about like the 50 year old case -- serious money, but not life changing. High Multi Trillion deficits on a now shrinking GDP are like the college student case -- code red, we are dead!!
The meaning of deficits is RELATIVE to the GDP of the country. The formerly "huge" deficits were all in the 2-4% range of usually quite healthy GDPs. NOW, we have WWII kinds of 60-80% to God knows where % of GDP without any war to blow up the production with!!! Which means that someone is going to have to BUY the "stuff" that gets bought/stimulated. Except none of this "stimulus" is going to people that buy stuff via less taxes or such, it is going to be spent by the Government for "something". But wait -- how are people going to be employed? In Government make-work jobs? How well do you suppose those will pay? and how much will those folks buy to stimulate the economy? Like basically zero ...
Now, it would be "nice" if China would just buy all our debt -- but then, we are going to have to be SURE to buy EVERYTHING from them so they have all that money to buy our debt. Therefore, NO JOBS!! The odd thing though is that a lot of the Americans that BO is certain are stupid rubes seem to be figuring that it might be better to just SAVE money!!! That actually IS a good idea for the economy long term, it just doesn't do anything to help short term unemployment. Especially when most of the savings is just going into all the government bonds that BO has to sell -- thus the very apt analogy of taking a bucket of water out of the Hudson river and then putting in back in at a different point. Getting a bigger bucket doesn't really do a hell of a lot.
The idea is to live on less than you make and INVEST the extra in something that goes up in value. Before BO and company decided to start buying up the worst of US industry and destroying the rest, that was usually STOCKS! Now it is most likely government bonds -- but unfortunately, those don't really do much to put people to work. At some point, somebody has to DO SOMETHING -- and that usually means risk/reward/competition/innovation/profits -- all that yucky stuff that BO hates.
So, we just tug on our bootstraps and watch the unemployment numbers rise.
