richardhutnik said:
I believe this is off to some degree. It is important to extend the malinvestment to malproduction and malconsumption, which is a bubble economy. As of now, you have an economy built on consumer debt, which has it caused to be restructured long. To throw stimulus at it, the end result is unsustainable economic growth. Schiff is doing a partisan spin, that someone would end up believing somehow if there was no government, then things would be awesome. Being hired at sub-minimum wage, isn't going to get someone a higher paying job. I know, for example, one person who hit the wall working as a stock clerk salary wise, because that is what is budgeted for his position. Corporate wouldn't allow him to get paid more. Job creation ONLY happens if a business believes it will have increased business and ONLY if there is no other way to address the need for new business. What is going on is there is a lack of confidence that business is going to grow, and business is looking for any possible way to meet new business coming in, without hiring. The trend has been for years now to get "lean and mean" and get rid of workers whenever you can, so you keep costs down, and increase productivity. You also also having trends like Blockbusters going out of business and replace with Red Box type vending machines, and Netflix. Also, he is the story on Schiff's fined for hiring wrong, in regards to it being the government doing it (a private regulatory organization fined him, FINRA): http://mediamatters.org/research/201109210002 Fined in 2010 for what happened in 2008. http://www.finra.org/AboutFINRA/ http://en.wikipedia.org/wiki/Financial_Industry_Regulatory_Authority This is a watchdog, funded by the industry itself, to police itself. And Schiff is upset at them: http://www.nypost.com/p/news/business/watchdog_bites_t7JaIebHyj2BtXs4Kpj33I
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If you watch both parts of the video series (its about 20+ minutes), Peter does get into mal-consumption and mal-production. I've been a big fan of him since his 1hr synopsis on why the housing market collapsed.
Peter isn't perfect, by far, but I do think he contributes a lot of sound arguments to the equasion. In his later arguments at the hearing, he talks a lot about how capital markets are very weak because interest rates are low, which ensures that there is far more desire to borrow cheap money than there is to lend it, which hurts businesses from taking out loans to create growth where possible. I agree our economy is built on consumer debt, but why have we had access to such cheap and readily available credit? Is it just the lenders fault? Just the government? Just the borrower? Or maybe it is an unholy alliance between all three contributing to the demise - of which, government must take the first step in pulling out of controlling the economy so much, forcing businesses and borrowers into more sane planning.
As for the Netflix-Redbox-Blockbuster analogy: Such changes in market dynamics have gone on for ages. Yes, part of it revolves around less workers, therefore more profit. But lets consider the other aspects, too: The reason Netflix/Redbox do so well is that they provide an arguably superior product (movies delivered to your door, TV or rent-at-any-store) for less investment. Blockbuster is dying because they were charging $3/day for the latest movies while Redbox was charging $1. What that means to the consumer is that they can allocate their capital to other purchases which will fund jobs in other markets. That is why increased productivity is a net benefit: costs to purchase an item go down, and the consumer can spend elsewhere, creating new demand.
Back from the dead, I'm afraid.
