| axt113 said: The key problem is that companies will not hire until they see consumers return to spending en masse, without the need for big discounts, right now that isn't there, spending has increased, but consumers are still being careful with their expenditures and demanding big discounts for their business, for businesses, this means that they are going to be hesitant to invest, or hire, and any money they get through tax breaks, etc. will just go into shoring up their financials, can't really blame them, because they want to make sure that if the economy slides again, they can weather the storm, but if they don't hire, then people are going to remain hesitant with their spending, kind of a catch 22 type deal, which is why government expenditure is needed until companies start hiring and people get back to spending. |
That’s one perspective ...
China (in many ways) acts sort-of like a crack dealer because their currency manipulation saps the health of the American economy while giving Americans the short-term high of low interest rates, low inflation, and deficit financed government spending. The damage to the health of the American economy can be seen in the (repeated) creation of asset bubbles, and the steady loss of jobs to developing nations. The Americans have two choices in front of them, they can "Go to rehab" and get their spending under control and work towards rebuilding their economy, or they can follow the Keynesian approach and "take another hit" to ease the withdrawal symptoms; the long and difficult "rehab" path will lead to the return to a healthy economy, while the Keynesian approach will eventually kill the economy.
Or to put it another way, how much longer can the US continue building debt at its current rate before it looks like Greece or the Weimar Republic?
