550 billion tax cut=1,000,000,000 jobs by 2004

[sailor]

Eva Luna rules! Unfortunately this started with another drive-by post by susanann who is in the habit of doing this kind of thing and never returning to admit her ignorance and prejudice.

originally posted by Evil Captor:
I still have problems with the notion that workers cannot be retrained, that only these foreign workers possess some kind of magical grasp of various IT slots that can’t possibly handled by the idiot good for nothing but burger flipping Americans who are already in IT but unemployed.

What’s the problem? Some people can’t do the job and others don’t want the job. Are you telling me everybody can do any job and everybody is willing? Not everybody has the capacity or the training or the will. An employer needs someone to do a certain job and he is not in the business of analyzing why some people may be unable or unwilling to do the job. If he can’t find someone near he will look for someone far. Why would an employer go through the trouble and expense of hiring a foreign worker? i just don’t understand those who demonize employers like they are some evil kind when employers are the ones creating jobs. And anyone who thinks he can do it better should start their own company and hire plenty of people. It bothers me to see people who cannot balance their checkbook giving lessons about running a large corporation.

I still sense a rush to devalue the unemployed here.

That is unfounded. Not everybody is suited or trained for every job. How many guys can play sports like football or basketball or baseball stars? How long does it take to train a software systems analyst? What is an employer supposed to do? Go to the unemployment lne and pick someone and train them for years? Most IT companies do provide plenty of training and courses to their employees but sometimes it just isn’t enough. Then take a job like nursing. There are just not enough Americans who want to be nurses, probably because it’s a depressing job. So you could say, well, let us just restrict the market to American candidates. Then what you have is (a) a big shortage of nurses and (b) the cost of nurses skyrocketing so that many people, especially poor people, would not be able to afford certain services. So what’s wrong with having foreign nurses who are ready, willing and able?

How about agricultural jobs? It is just a fact that there are not enough Americans willing to do them. So, you say, pay $25 an hour! Yeah, and then you just jave to charge $5 for a pound of tomatoes. Not to mention that it makes foreign produce more competitive. If you don’t import the worker to do part of the job, you end up exporting the whole industry, as Sam Stone said. Or are you going to close the borders too? The whole scheme has many consequences some people are not realizing.

I have a big problem with those who see protectionism as a solution to anything. Protectionsim always protects a small group at the expense of the rest of society. Those who want to keep jobs in America have to tell us how many Americans are willing to pay $50 for a shirt they can buy for $5 when it is made in China.

Job security comes from being competitive in a field which is in demand and the rest is just plain demagoguery. And, as Sam Stone said, if you don’t import the workers what will happen is the jobs themselves will be exported. The only way to thrive is to be efficient and competitive. Protectionism in any form is not the answer.

[newcrasher]

*Originally posted by Reeder *
**

Does he really think that none of the rich will take their tax cut and run?

**

OK, where will they run? What do you think the rich will do with there tax cut?

Even if they buy a new yacht, or that cottage in the Hampton’s they have always wanted, it will be reinvested in the economy.

Now if they collect the cash and pile it up in the living room to look at, then we have a problem.

Will the rich get a bigger tax cut? YES BECAUSE THEY PAY MORE TAXES! Just because they are rich doesnt mean they are not entitled to their own money…

But the thing that kills me is that people dont understand that when rich people spend money…THEY CREATE JOBS!

[system]

Yes, money spent in the economy helps support jobs.

However my dear fellow, upper income brackets have a higher propensity to save, noticably higher. The extent to which those savings help of course in long term investment, that is positive, however as a matter of near term stimulus, that’s another matter.

What should kill you is simplistic, poorly informed gut reactions.

Entitlement is not a question here if we’re being analytical, the questions are how to best design an economic policy, and how a specific tax policy might have specific effects, net.

[newcrasher]

I really find it interesting how the people who are out there, trying to actually make a business work post one way, while the other side is represented by people who’s opinion is based in economic theory.

You won’t hear:

“Hi, I’m Bob. I run a print shop in Dothan, Alabama. I have 7 employees who range in salary from $8.50 per hour to $45,000 per year. My profits after taxes and expenses last year was $13,200. If get any of that blasted tax relief’, I am sending it right back!.”

[newcrasher]

*Originally posted by Collounsbury *
**Yes, money spent in the economy helps support jobs.

However my dear fellow, upper income brackets have a higher propensity to save, noticably higher. **

Where do they save their money?

[system]

*Originally posted by newcrasher *
**Where do they save their money? **

In all kinds of places, with liquid capital markets that’s not particularly an issue (although note my comments in the dollar-war thread).

The relevant point is the higher marginal propensity to save reduces any stimulative effect, all things being equal, as compared to other policies, e.g. tax rebates to lower income brackets.

By the way, my dear fellow, I am a practitioner, not an academic, and I work and invest in economies that are lot fucking harder than the US, so don’t play the “oh the business man says” bullshit with me.

The economic points raised are well supported by economeric evidence. As to the needs of any individual business owner, well of course we’d all like to pay less taxes. However, that is balanced against the requirement to pay for overall government services etc. Whinging on about taxation w/o rational argument is the activity of the whiner and the blame shifter.

[Spoke]

I have a question:

Granting for the sake of argument that Bush’s tax cut creates jobs, why do we assume the jobs created (or the bulk of them) will be in the US? I mean, we have a global economy, no? So what if I spend my tax cut on an imported product? Maybe I’m helping one or two guys down at the docks, but it seems to me the bulk of the stimulus effect might go to workers overseas. Am I wrong?

Hell, it seems like a government works program would provide a more direct stimulus to the US economy than a tax cut. Take the money that would have gone to a tax cut and use it to hire folks to build roads, bridges, mass transit, recycling plants and other infrastructure improvements. Direct stimulus, no?

[system]

Well, I believe here we’ve got a complicated proposition.

I supposre that with some real number crunching we might be able to quantify in a snap shot what percentage of a defined income tranche’s consumption was spent on imported goods. Low end consumer items, perhaps largely imported, but perhaps not if the bulk of spending is on food. Luxury goods, imports or not? (inc. vacations which can be an imported service)

Then of course what complicates this is what degree of imports have some US component in them in the value chain, given global supply chains?

Not easy things to pull apart.

Still, it is an important point, given US consumption patterns up and down the scale.

[jshore]

*Originally posted by newcrasher *
Now if they collect the cash and pile it up in the living room to look at, then we have a problem.

Will the rich get a bigger tax cut? YES BECAUSE THEY PAY MORE TAXES! Just because they are rich doesnt mean they are not entitled to their own money…

But the thing that kills me is that people dont understand that when rich people spend money…THEY CREATE JOBS!

Yes, we understand that rich people spend and invest money. But, the government also spends money and poorer people spend money too. All of this has a stimulative effect. You have to compare the different possibilities. And, in fact, one can bet that if you give money to a poor person, he’ll go out and spend it quickly and it is will work its way up to a rich person pretty fast…I think there is little question that “percolate up” economics works well. The advantage of this over “trickle down” is that, in the meantime, you’ve given more spending power to this poor person. Also, the evidence for “trickle down” amounting to much more than a small trickle isn’t really there as far as I can tell, certainly from looking at the trends in real family incomes and wages over the past 20-odd years.

[jshore]

*Originally posted by newcrasher *
Now if they collect the cash and pile it up in the living room to look at, then we have a problem.

Will the rich get a bigger tax cut? YES BECAUSE THEY PAY MORE TAXES! Just because they are rich doesnt mean they are not entitled to their own money…

But the thing that kills me is that people dont understand that when rich people spend money…THEY CREATE JOBS!

Yes, we understand that rich people spend and invest money. But, the government also spends money and poorer people spend money too. All of this has a stimulative effect. You have to compare the different possibilities. And, in fact, one can bet that if you give money to a poor person, he’ll go out and spend it quickly and it is will work its way up to a rich person pretty fast…I think there is little question that “percolate up” economics works well. The advantage of this over “trickle down” is that, in the meantime, you’ve given more spending power to this poor person. Also, the evidence for “trickle down” amounting to much more than a small trickle isn’t really there as far as I can tell, certainly from looking at the trends in real family incomes and wages over the past 20-odd years.

[rjung]

*Originally posted by Collounsbury *
By the way, my dear fellow, I am a practitioner, not an academic, and I work and invest in economies that are lot fucking harder than the US, so don’t play the “oh the business man says” bullshit with me.

Just out of curiousity, newcrasher, but what are your economic credentials?

[Sam_Stone]

Collounsbury said:

Yes, money spent in the economy helps support jobs.

However my dear fellow, upper income brackets have a higher propensity to save, noticably higher. The extent to which those savings help of course in long term investment, that is positive, however as a matter of near term stimulus, that’s another matter.

The president is not representing his tax cut as a ‘stimulus’ plan. He’s representing it as a ‘growth’ plan. Because that’s what it is. You’re right - there’s little short-term stimulus in the tax cut plan. But does the U.S. need a short-term stimulus? The economy is not all that bad, you know. It’s not in recession, unemployment, while higher than it was during the last bubble, is still at levels that are historically reasonable. Interest rates are low, inflation is low. There is no crisis - certainly not one that requires a stimulus package.

Because here’s the thing - there’s a cost to government ‘stimulus’. Artificial injections of capital into the economy may create short-term growth, but at the expense of distorting prices and screwing up production. It’s hard to make good economic choices in an unstable environment.

So, if you’re not in a fiscal crisis, it’s much better to engage in long-term, permanent restructuring to encourage growth. And that’s what this plan does. At least, a little. It’s really a trivial amount compared to the size of the economy, so any effects one way or the other will be minimal.

But there’s another big reason why I support tax cuts like this, and I’m sure it’s one of the unstated reasons why Bush does - cutting taxes is one of the only ways to encourage long-term fiscal discipline. Government is rapacious. Give it the money, and it will spend it. So when you have a deficit, increasing taxes to pay for it usually winds up just making spending bigger - governments tend to run deficits as high as politically palatable no matter how much revenue they have.

And before anyone points out that Clinton ran surpluses, I would point out the reason for that, which was that the economic bubble caused government revenue to grow faster than predicted. By the time Clinton left office, government spending was starting to explode.

Entitlement is not a question here if we’re being analytical, the questions are how to best design an economic policy, and how a specific tax policy might have specific effects, net.

I agree. And you think the best way to design an economic policy is to have the government inject arbitrary, one time lump sums of cash into the money supply? I much prefer a solid, consistent, pro-growth, minimally interfering fiscal policy that allows the market to work without distortion.

[samclem]

Sam Stone said

The president is not representing his tax cut as a ‘stimulus’ plan. He’s representing it as a ‘growth’ plan. Because that’s what it is. You’re right - there’s little short-term stimulus in the tax cut plan. But does the U.S. need a short-term stimulus? The economy is not all that bad, you know. It’s not in recession, unemployment, while higher than it was during the last bubble, is still at levels that are historically reasonable. Interest rates are low, inflation is low. There is no crisis - certainly not one that requires a stimulus package.

Bolding is mine–sc.

Sam. As you know, you and I disagree a bit on the general issues about the health of the US economy.

I, unfortunately, am pessimistic about the chances of avoiding a new recession. I don’t wish one, but the seeds are there ImHO.

Obviously a majority of Republicans and Democrats disagree with Bush’s tax cut. It’s not gonna be anywhere near his original proposal.

The Federal Reserve today, while not lowering interest rates, said(in there usual quiet way, but with a new disconcerting disagreement among the ranks) that there is uncertainty in the current economic environment. Things could go either way. The summary from the NYtimes(sorry)

Fed Worries About Prices, But Holds Rate (Published 2003)

is balanced. I can see where one could take heart or not by saying the glass is half empty or half full. We’ll have to agree to disagree.

Warren Buffett, the second richest man in the US, and rather conservative, said today that he disagrees with Bush’s plan to remove taxes on dividends, arguing that the creation of jobs by such is totally unproven and therefore unwise. And, parenthetically, unfair as favoring the rich. Buffett said it. Not me.

[Apos]

The president is not representing his tax cut as a ‘stimulus’ plan. He’s representing it as a ‘growth’ plan.

Growth is one of three objectives, the other two being “Encourage consumer spending that will continue to boost the economic recovery and create jobs.” (i.e., stimulus) and “Deliver critical help to unemployed citizens.” (whatever THAT means).

http://www.whitehouse.gov/news/releases/2003/01/20030107.html

And in his public statements, he’s been even more outspoken about helping the economy (despite his plan still being mostly long term, as you say)

But there’s another big reason why I support tax cuts like this, and I’m sure it’s one of the unstated reasons why Bush does - cutting taxes is one of the only ways to encourage long-term fiscal discipline. Government is rapacious. Give it the money, and it will spend it.

Is this or isn’t this contradicted by Bush using a surplus to give people large tax cuts and refunds instead of spending it?

But anyway, this is the old: “I have to eat this cake, so I can grow dangerously fat, because otherwise, I won’t diet.” This is a painfully silly argument when Republicans control the White House and both houses of Congress. If they care about overspending, they can do something about it right now. Why haven’t we heard anything about the centerpiece of the old Contract for America that used to be all the rage: the balanced budget amendment?

[Sam_Stone]

The fact remains, that by historical standards this economy is just not that bad. Unemployment is at 6.8%. That’s lower than almost the entire decade of the 1980’s. Unemployment peaked at 9.5% in 1982, and stayed that way for two years. It wasn’t until 1987 that unemployment dropped below 7%.

The deficit, at 300 billion dollars is only about 3% of GDP. The deficit during the worst year of the Reagan administration was TWICE as much. They were 50% higher during the last three years of the first Bush administration. They were about as high during the first three years of Carter’s administration.

Interest rates and inflation are both at near-all time lows.

Compare today’s economy to that of 1983. Unemployment was almost 10%. 17,000 businesses failed. Inflation was falling from 14% in the previous year, but were still very high. Interest rates were over 10%. And the economy was contracting, not expanding slowly as it is now. The government’s deficits were double the current projected deficits. And, there was a cold war going on.

Today’s problems just don’t compare.

[system]

*Originally posted by Sam Stone *
Collounsbury said:
The president is not representing his tax cut as a ‘stimulus’ plan.

I could give a fuck what he’s representating as, I was responding to the characterizations. As for the representations, that’s simple expediancy, much like the NBC weapons and terror links.

Because that’s what it is. You’re right - there’s little short-term stimulus in the tax cut plan. But does the U.S. need a short-term stimulus? The economy is not all that bad, you know.

Perhaps, perhaps not.

It’s not in recession, unemployment, while higher than it was during the last bubble, is still at levels that are historically reasonable. Interest rates are low, inflation is low. There is no crisis - certainly not one that requires a stimulus package.

The low inflation levels and by extension interest rates are part of an issue Sam. We’re not in the 1970s any more, nor the 1980s. Much of the world is facing deflationary pressures, which are a dangerous thing. Hard cycle to break if one gets into it.

The structure of the economic threat is quite simply different, so I hope in upcoming messages you will spare us this harkening back to problems not present.

Because here’s the thing - there’s a cost to government ‘stimulus’.

No need to put stimulus in quotes Sam, and you’re right there are costs. There are also benefits. Whether they are justified here is another issue. I am personally not arguing for a stimulus package, I’d rather see fiscal discipline.

Artificial injections of capital into the economy may create short-term growth, but at the expense of distorting prices and screwing up production. It’s hard to make good economic choices in an unstable environment.

Well, yes. That’s not news to me of all people. Try investing here.

The artificial part is, needlessly pejorative in this context – government spending is part of the economy and will be in any economic model one cares to come up with ex-some bizarro world ‘libertopia’ that makes about as much sense as the Marxist state withering away.

Analyzing a stimulus is a matter of guessing at whether there is slack in the economy. Keynsian short term analysis.

So, if you’re not in a fiscal crisis, it’s much better to engage in long-term, permanent restructuring to encourage growth.

Well, I will readily agree that fiscal stimulus should be saved up for the right moment. It is not clear the present slow growth needs a stimulus, but then I am not arguing for one.

And that’s what this plan does. At least, a little. It’s really a trivial amount compared to the size of the economy, so any effects one way or the other will be minimal.

Right Sam, as always Bush has come up with the brilliant strategy…

If we spare ourselves the flackery, it hardly appears to me the present tax cutting push makes very much sense at all, given the rising deficits and severe pressures on US accounts. Further pushing tax cuts far into an uncertain future is simply wishful thinking and poor managment. This is simple minded ideology, but then we have this:

But there’s another big reason why I support tax cuts like this, and I’m sure it’s one of the unstated reasons why Bush does - cutting taxes is one of the only ways to encourage long-term fiscal discipline. …

Ah yes, back to the early 1980s. Wonderful. Boy them Reagan tax cuts sure did encourage fiscal discipline, and Clinto era surpluses were just bec. of a bubble…

This is not even worth my time, if you believe this shit, go right ahead. Bloody fantasy world excuse making.

[system]

*Originally posted by Sam Stone *
The fact remains, that by historical standards this economy is just not that bad. Unemployment is at 6.8%. That’s lower than almost the entire decade of the 1980’s. Unemployment peaked at 9.5% in 1982, and stayed that way for two years. It wasn’t until 1987 that unemployment dropped below 7%.

This much I will grant, although on the politics Sam, you still lose, since people benchmark off of recent experience, not vaguely remembered crises.

The deficit, at 300 billion dollars is only about 3% of GDP. The deficit during the worst year of the Reagan administration was TWICE as much. They were 50% higher during the last three years of the first Bush administration. They were about as high during the first three years of Carter’s administration.

Well, that is all well and cheery other than it abstracts away from the fact these flows come on top of a rather large accumulated debt, what 1.5 trill now?, and in a very different environment with large trade deficits and important pressures on the dollar.

It also abstracts away from the fact Bush’s numbers depend on… how did the Economist put it, ‘heroic assumptions’ that do not stand to scrutiny. As I recall the Economist looked at doubling the figures once one includes Iraq costs etc.

And of course such sustained deficits, which grow worse, have interest rate and FX implications that have potential to be unpleasant.

Interest rates and inflation are both at near-all time lows.

Yes, Sam, as noted previously, the structure of the economic risks are fundamentally different.

Current issues involve bubble driven over-investment by the private sector and potentially medium term excess capacities in the global and national markets that tend to have deflationary effects. I am sure you read actual economic commentators, as opposed to ideological excuse makers, who have pointed out that the present economic climate is rather structurally diff. from that of the past 20-25 years.

That does not mean, I should add, I think that we’re about to tumble into a deflationary spiral a la Japan, but simply repeating a mantra of low interest rates and low inflation is not really the point.

Today’s problems just don’t compare.

No, they are structurally different. Different risks, different.

In any case, I am amused by the volte-face the Neo-Cons have done on deficits. Amused. I await the day when ideological concerns cause them to become Keynsians for expediancy purposes.

[Sam_Stone]

I’m neither a neo-con, nor am I passe’ about deficits. But I recognize the deficit for what it is: A spending problem. The government’s revenue today is many times what it was in the 1980’s, yet there are still deficits. Many governments in Europe tax their citizens much heavier than the U.S. does, and bring in a much higher percentage of their GDP in taxes, yet they are still in deficit.

The fact is, the only thing that seems to constrain government spending is a deficit and debt problem that is enough out of control for there to be a political price to pay for increasing it. As long as the public doesn’t care, the government will spend every nickel it has, and borrow as much as it can. There is simply no fiscal discipline.

And I’m not particularly interested in placing blame on anyone, or giving credit to anyone. That game is a waste of time, because partisans on both sides have enough ways to jigger the numbers in their bags of tricks to make the whole exercise pointless.

And yes, I agree that deflation is the bigger risk today, and the problems of the 1980’s were different. But still, most economic fundamentals are much better today than they were then.

As for various stimulus plans (Bush or other). My belief is that they will be close to useless. The problem is demand driven - American productive capacity is sitting at something like 75%. The problem is, people aren’t buying.

And I see no evidence that lack of money is the root of the problem. Rather, it seems to me that the downturn is due to good old risk aversion. The economy has recently gone through: A tech bubble collapse, a major terrorist attack, a 1 trillion dollar asset loss (the WTC complex and assorted revenue losses from its destruction), and two wars. Then the SARS problem on top of that. In such environments, people tend to scale back their purchases and hunker down a little. Plus, we lost the ‘wealth effect’ of all those artificially inflated portfolios.

In other words, the recession looks to me to be caused not by a fundamental structural problem in the economy that needs fixing, but by a series of one-time ‘shocks’. The best thing Bush can do for the economy is lower the risk of terrorism, clean up Iraq and Iran, solve the North Korean problem, and hope the SARS breakout comes under control. The economy will fix itself over time. No stimulus needed.

Alan Greenspan agrees with me. The Fed didn’t cut rates today, because he says all the pieces are in place for reasonable economic growth in the near future.

Oh, and that 75% productive capacity means that when demand comes back, the economy could grow at a pretty rapid clip.

And note that the Dow is up 1300 points since November. Given the number of people with depressed portfolios, that’s a giant stimulus all its own.

[Sam_Stone]

Oh, and I forgot this:

Well, that is all well and cheery other than it abstracts away from the fact these flows come on top of a rather large accumulated debt, what 1.5 trill now?

As a percentage of GDP, the debt has been falling since 1994. At its peak in 1994, the debt was about 67% of GDP. It has fallen about 10% since then, and has now slowly climbed back to about 62%. Not exactly a huge crisis. The debt has been over 50% of GDP since 1987. Through most of the ‘boom’ of the 1990’s the debt was higher than it is today.

Again, this doesn’t mean I’m a fan of huge debts and deficits. Nor am I making excuses for the atrocious spendthrift ways of the Bush administration. I’m just pointing out that there is no ‘crisis’ which warrants a huge government intervention into the markets via a one-time injection of cash.

and in a very different environment with large trade deficits and important pressures on the dollar.

While the trade deficit has grown in recent years, it was this bad for four years from 1984 to 1988. It’s also not that clear to me that trade deficits are a bad thing. That currency has to come back in one way or another. Remember when Japan was going to ‘take over’ America? That’s because they built up huge amounts of U.S. capital due to a big trade deficit. They re-invested that money back into the U.S. by buying up property all over the place at grossly inflated prices. A few years later, they sold that property back at pennies on the dollar. The U.S. made out like a bandit at the expense of the Japanese. So whether trade deficits are bad or not depends on what’s going on in other parts of the international economy that are not counted in trade deficit numbers.

[system]

*Originally posted by Sam Stone *
As for various stimulus plans (Bush or other). My belief is that they will be close to useless. The problem is demand driven - American productive capacity is sitting at something like 75%. The problem is, people aren’t buying.

Given consumption is already dependant on a near negative savings rate, there is precious little room for demand expansion on a sustainable basis.

The issue is over-investment. Takes time to work that out.

And I see no evidence that lack of money is the root of the problem.

This makes no sense. What lack of money? On demand side? In what sense?
[qote]
Rather, it seems to me that the downturn is due to good old risk aversion.

[/quote]

Risk aversion is a component, over-investment in productive capacity is the rather more serious component. Supply is far out of whack with ‘long term demand’

The economy has recently gone through: A tech bubble collapse, a major terrorist attack, a 1 trillion dollar asset loss (the WTC complex and assorted revenue losses from its destruction), and two wars. Then the SARS problem on top of that. In such environments, people tend to scale back their purchases and hunker down a little. Plus, we lost the ‘wealth effect’ of all those artificially inflated portfolios.

All but the last are short term hindrances, the overall position of the consumer is more important, as noted near negative to negative savings is not sustainable.

In other words, the recession looks to me to be caused not by a fundamental structural problem in the economy that needs fixing, but by a series of one-time ‘shocks’. … The economy will fix itself over time. No stimulus needed.

That’s absurd verging on delusional. There is clearly a structural mismatch from over investment based on unsustainable assumptions.

I personally would not argue for a stimulus (nor a tax cut either) but your analysis is absurd.

Alan Greenspan agrees with me. The Fed didn’t cut rates today, because he says all the pieces are in place for reasonable economic growth in the near future.

Amusing. Inaccurate but amusing. Quoting from the FT analysis: “In an unprecedented move, which economists said underlined its concerns about deflation, the Fed split its usual assessment of the overall balance of risks to the economy into separate judgments on growth and inflation.”

Deflationary pressures in other words, arising not from one-off shocks. I further note “The risks to economic growth - one of the Fed’s key objectives - were balanced, the Fed said. But the committee said the risks arising from another fall in inflation meant the overall balance of risks to the economy was on the downside. The statement amplified Fed chairman Alan Greenspan’s warning about low inflation last week. Mr Greenspan’s favoured measure of inflation, the change in the core price index for personal consumption, recently fell to an annualised rate of just 0.9 per cent and the Fed has been anxious to head off any chance of inflation turning negative.”

I also note the continued dollar decline, which while good in terms of rebalancing demand is continuing apace: “The dollar also dropped, having already hit multi-year lows against other currencies before the meeting, with investors saying the prospect of lower yields on US assets had further limited its attractiveness.” Nota bene, to fund that deficit you need inflows.

And finally “But economists have warned that with the sustainable rate of growth of the US economy now estimated at about 3 to 3.5 per cent, it needs a strong recovery in growth towards its potential to stop inflation falling further.”

Oh, and that 75% productive capacity means that when demand comes back, the economy could grow at a pretty rapid clip.

When demand comes back…

And note that the Dow is up 1300 points since November. Given the number of people with depressed portfolios, that’s a giant stimulus all its own.

That is hardly a giant stimulus at all. Bloody hell man, please do not say silly things like this.