Broke dicks can't save the economy...

Takes a surplus to get us out of this mess. Ain't going to happen! Better paying jobs have been shipped out to foreigners destroying our manufacturing base.This in turn means that high school grads and drop outs can't get a better paying job and are stuck with lower real wages. This in turn means that our cash goes overseas and has to come back by buying our assets.(mostly real estate and bonds) as we have less and less to sell overseas. And our manufactured goods comeback cheaper and put more pressure on the remaining factories. leading to further declines in our standard of living.

To cover up this government created debacle the government takes much of these funds and buys votes with it by various welfare schemes and pumps up the military to protect this system around the world. Once this cycle starts, of course, all we will get is another speculative boom fueled by printing press money. Then another bust, bigger than this one, because the economy has no surplus wealth to pay off the overburden of debt which has to be rolled over. This is usually referred to as a"Ponzi scheme."

Government deficits are not the problem as they can borrow the excess cash back by selling treasuries and put it back into the system. 

At least until no one, for whatever reason, continues buying them.

oftwominds: Oversupply of Old Failed Ideas, Undersupply of New Pragmatic Ideas

1. The bottom 80% of consumers are over-indebted and have little assets or surplus income to leverage into more consumption. Please see The Root of the Housing Bubble Remains Unchanged (May 27, 2010) and The Stock Market As Propaganda (March 10, 2010) for more on these topics.


2. The 75% of U.S. households who are above the poverty line already own everything anyone could possibly need for a wonderful, fulfilled lifestyle. That is the dirty little secret not just of the Keynesian Idea but of post-industrial Neoliberal Global Capitalism.


I devote a considerable amount of the Survival+ critique to the entire notion that "demand" for more stuff and services is actually as endless, beneficial and fulfilling as the relentless media-marketing machine would have us believe. The causal connection between ever-rising consumption and individual happiness is actually weak to non-existent; beyond a rather modest level (clean water, warm place to sleep, sufficient calories to eat, etc.) then the factors which leverage human happiness and fulfillment are relationships (friends, etc.) and meaningful work.


So the explicit premise of the entire Keynesian Project--that private demand for more consumption is the foundation of "prosperity," and thus all we need to do is lavish enough money on consumers to spark their insatiable appetite for more, more, more of anything and everything--is doubly bankrupt: there are limits on private "organic" demand (i.e. demand which isn't created by giving everyone $3,000 to buy a new car, etc.) both financially (most American households have too much debt and not enough surplus income and/or assets to justifiy more borrowing and splurging) and intrinsically: another thousand songs on your iPod, another pair of shoes, another session at the nail salon--none of it actually adds much to human fulfillment or happiness.


Beyond a modest level, consumption is the classic example of diminishing returns: you keep spending more but enjoying it less. At the end, ennui, alienation and exhaustion replace enjoyment. An addictive cycle of consumption, dissatisfaction and a derangement devoid of self-awareness takes hold.


Indeed, it can be argued that our entire economy of consumption is more a systemic cultivation of addiction than a system based on fulfilling human needs and "the pursuit of happiness."


So many proponents of the Keynesian Idea refer back to the 1930s as the testing field for their "solution" of fiscal and quantitative stimulus (easing of interest rates and availabililty of credit).


Yet so many fundamental factors in the present were not factors in the 1930s. To name but a few: global wage arbitrage was not much of a factor, and it certainly is a key determinant of U.S. household income now. If the U.S. fails to create real products and services with a high market value in the global market, then U.S. wages will trend to the wage levels in lower-value producers.


You can borrow and spend all you want, but if incomes are declining for structural reasons, along with assets deflating from credit bubbles, then you are shoveling sand to hold back the tide. Rising debt loads require rising incomes. Without rising incomes, rising debt leads to insolvency. That is "obvious," yet it is not something Keynesians can admit, lest their entire Project be revealed as intrinsically flawed.
SNIPPET

The demographic realities of a shrinking workforce and rising cadre of retirees dooms the entire Social Welfare State idea.
The conceit of the Social Welfare State--that the State can provide
retirement and healthcare for 40% of its citizenry by heavily taxing
the 40% who are working in taxpaying jobs (as opposed to the
cash/no-tax economy) will be proven false. Proponents keep claiming
that minor tweaking of parameters will make this idea work: extend
retirement age by a few years, increase the tax a few points, etc.