America Is Executing A 'Beautiful Deleveraging'

[Teatownclown]

http://www.businessinsider.com/ray-dalio-america-beautiful-deleveraging-2012-5
http://online.barrons.com/article/SB50001424053111904370004577390023566415282.html

A beautiful deleveraging balances the three options. In other words, there is a certain amount of austerity, there is a certain amount of debt restructuring, and there is a certain amount of printing of money. When done in the right mix, it isn't dramatic. It doesn't produce too much deflation or too much depression. There is slow growth, but it is positive slow growth. At the same time, ratios of debt-to-incomes go down. That's a beautiful deleveraging.

We're in a phase now in the U.S. which is very much like the 1933-37 period, in which there is positive growth around a slow-growth trend. The Federal Reserve will do another quantitative easing if the economy turns down again, for the purpose of alleviating debt and putting money into the hands of people.

We will also need fiscal stimulation by the government, which of course, is very classic. Governments have to spend more when sales and tax revenue go down and as unemployment and other social benefits kick in and there is a redistribution of wealth. That's why there is going to be more taxation on the wealthy and more social tension. A deleveraging is not an easy time. But when you are approaching balance again, that's a good thing.

This article is essential reading for understanding what has happened the past three years and what to expect after November.

Meanwhile, the GOP/Teabagger Party continues to say one thing but do another by filling the pockets of defense contractors with our tax dollars.
House OKs $642 billion defense bill ... http://www.sltrib.com/sltrib/world/54141096-68/defense-president-military-obama.html.csp
One party thinks military spending will pump up the economy while the other party sees more value in supporting social services.

[Red Arrow]

One party thinks military spending will pump up the economy while the other party sees more value in supporting social services.

Defense/military spending creates jobs, usually with wages/salaries big enough to create spending on a broad spectrum of goods and services.  A significant amount of the technology eventually spills over to the civilian community and, for the most part, makes our lives easier or more enjoyable.  Voters in this group are a mix of Republican, Democrat, and others.

Social Services, other than the medical community, creates some administrative jobs, generally does not produce a product while still costing a lot but does keep a lot of riots from happening.  (See French Revolution, let them eat cake.....) Most recipients of social services will vote Democratic.  Social services are an effective way to buy votes.

I separated the medical community due to the high level of education required and the fact that a lot of jobs with good pay are associated with medical care.

[Teatownclown]

In 2 years we'll be through the difficulties wrought by the horrid Busheviks. QE3 will send equities upward....unless the GOP/Teabaggers get control and fail to stimulate.

[nathanm]

Social services are an effective way to buy votes.

That's some crazy logic right there. By that standard anything the government does is buying votes. Tax cuts? Buying votes. Opening a park? Buying votes. Locking up criminals? Buying votes.

[Conan71]

That's some crazy logic right there. By that standard anything the government does is buying votes. Tax cuts? Buying votes. Opening a park? Buying votes. Locking up criminals? Buying votes.

You are correct on all accounts.

"If I'm elected, I'll be tough on crime"

"If I'm elected, I'll cut your taxes"

"If I'm elected, I'll improve education"

"If I'm elected, I'll improve our roads"

"If I'm elected, your grandmother won't need to worry about where their next meal is coming from"

"If I'm elected, you will get your Obama money"

[Red Arrow]

That's some crazy logic right there. By that standard anything the government does is buying votes. Tax cuts? Buying votes. Opening a park? Buying votes. Locking up criminals? Buying votes.

I think you have stretched the logic a bit but you are not incorrect.  Social services are still a very effective way to buy votes.

[Teatownclown]

I think you have stretched the logic a bit but you are not incorrect.  Social services are still a very effective way to buy votes.

So is supporting wars.....

[Red Arrow]

So is supporting wars.....

Social services buys a lot more votes than wars.  At least they have since WWII.

[Teatownclown]

PACs provide more buying of votes than any other source....

[nathanm]

Social services are still a very effective way to buy votes.

I'm not sure why it is that you think people who benefit from social programs (aside from Social Security and Medicare anyway) vote much. Seems to me those are the people most affected by registration purging and various other bars to voting. Not to mention they're not terribly likely to register to vote in the first place.

At first glance, Census data bears this out.

[Red Arrow]

I'm not sure why it is that you think people who benefit from social programs (aside from Social Security and Medicare anyway) vote much. Seems to me those are the people most affected by registration purging and various other bars to voting. Not to mention they're not terribly likely to register to vote in the first place.

At first glance, Census data bears this out.

I believe there are large numbers of voters who vote for social programs because it eases their conscience to think they are helping others regardless of whether the programs are effective.  It's not just the recipients that are selling their vote.  I keep SS and Medicare separate as they are, at least mostly, a benefit paid for by the recipient.

[Red Arrow]

PACs provide more buying of votes than any other source....

Opposite direction.

PACS buy votes of legislators.  The other discussed items buy the votes of the citizens to keep chosen legislators in office/power.