America's Boom Has Begun

Discussion in 'Economics & Trade' started by LafayetteBis, Apr 11, 2021.

  1. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    The above title is from no less an authority than the Economist (see here).

    Quote:
    The question posed is a good one - once a boom begins, how well can it last? And if it does last, how does it effect general-pricing of goods/services?

    Which, if they get out of hand, tend to instigate the opposite effect, which can produce out-of-control inflation that leads to economic contractions - that is, recessions.

    Manipulating economies by means of government action is not always very easy ....
     
  2. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Here's another question: How can an economist tell the difference between a sustainable boom and an unsustainable bubble?

    (remember: in a bubble the high times make the low point worse)
     
    Last edited: Apr 11, 2021
  3. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Well, let's just suppose for the sake of hypothetical argument that this were an unsustainable bubble. We can look back to the Housing Bubble to see what the effects will be. The over-inflated economy led to inflation, which was roughly proportional to the perceived increase in prosperity. After the bubble collapsed, that inflation level would have also collapsed (leading to deflation back down to original levels), if the Federal Reserve Bank had not stepped in, propping up the inflation to keep prices (in nominal values) where they were at, even though wages went down.
     
    Last edited: Apr 11, 2021
  4. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    It's dangerous to keep "stimulating" the economy to deal with economic problems.
    Kind of analogous to not sleeping and just drinking more coffee when you're tired.

    Trying to "jumpstart" an economy will just make things worse if the circumstances were not such that the economy was capable of being jumpstarted up to a certain level.

    (We all agree that there is a certain point where it would be impossible for more stimulus to improve the economy)
     
    Last edited: Apr 11, 2021
  5. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    How can you see if a bird knows how to fly. By witnessing the fact that it flies. Economics is no different.

    Economists can only do so by watching the numbers to assure that directional succession exists. If up or down, such a succession (over two/three/four months) likely signals a definitive direction of GDP. That is fact and not theory - and it's damn simple ...

    PS: And no, I don't think that such a progression (up or down) is predictable given that human-nature is the propelling factor behind Demand for goods/services ...
     
    Last edited: Apr 12, 2021
  6. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    Any economy that demonstrates over a period of time (3 to 6 months) its direction is sufficient evidence. Beyond four months whilst doing nothing is almost criminal behavior of any government with the means to influence the economy. (Like spending money in an economic downturn.)

    [QUOTE="kazenatsu, post: 1072561936, member: 74540"Trying to "jumpstart" an economy will just make things worse if the circumstances were not such that the economy was capable of being jumpstarted up to a certain level. (We all agree that there is a certain point where it would be impossible for more stimulus to improve the economy)[/QUOTE]

    Unfortunately, we don't. There is no "magic point" beyond which government-spending automatically corrects a stagnation or diminishing of GDP. It is often even very, very difficult to understand the cause. But, too often, it is because there has been a change in government and the new one has "yet to learn how an economy works".

    Because the circumstances in any real-case could be very different every time. Present history is a case-in-point. Donald Dork refused to expand the economy when Covid was starkly menacing "consumer will to purchase". And I suggest that, even if he had tried harder (which he openly refused to do) it is unsure that the outcome would be any different. The outbreak of SARS in China around 2003 never did find an anti-dote and both the US and China kept searching for it at least three years after it had come and gone!

    Apparently, we human beings had not learned the proper lesson from that historical precedent, which is why we are paying the price nowadays!

    We've never ever had such a quick destruction of GDP as with Covid. Once any country is fully vaccinated, people start buying once again because they sense naturally that purchasing is worthwhile. Were it not, they would not.

    England, today, is such a case in point - having (1) had an antidote right nearby (developed in the UK) and (2) the ability to produce it and (3) a general willingness to adopt it largely within the population. So, it seems to have worked at least in the UK even if it had to wait about a year to develop the vaccine!

    Which is not as predictable as one might think. Already - here in France - some people are refusing AltraZeneca because it causes a thrombosis in some (about ten so far in a nation of 65 million people). So, some people today are refusing that shot! How stoopid can you get ... ?
     
    Last edited: Apr 12, 2021
  7. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    It becomes obvious from the numbers - that is, where they are sustained. If sustained progressively over a sufficiently long period of time. If not, then more money must be borrowed and injected into the economy. You are making it seem incredibly difficult to manage an economy, when it isn't. Where there's a will, there's a way.

    The problem (if any) is not economic! It is that "politics influences the will-to-act". Pure economics is dead simple. When there is a lack of Demand, then you have to "bump-it with a trumpet" - that is, the government spends money. But, to do so, a PotUS must move the levers of spending. (Thus increasing national debt.)

    Works every time when done correctly ... stop making a mountain out of a mole-hill ... !
     
    Last edited: Apr 12, 2021
  8. zalekbloom

    zalekbloom Well-Known Member Past Donor

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    Good point.
    "The only function of economic forecasting is to make astrology look respectable" - John Kenneth Galbraith
     
  9. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    The mistake I suggest we make it to think that "economics" is a science that behaves like all sciences. But, there are no physical-laws of economics.

    There is only one-equation that matters: GDP = C + I + G + (X-M)

    And that one is just a matter of proper number collection-and-addition/subtraction.

    So, typically, the response to lower-than-necessary GDP in a country is Government Spending ...
     
    Last edited: Apr 12, 2021
  10. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    But should government boost demand when that level of demand is not sustainable on its own, without government support?

    Look, classical Keynesianism tells us government should not be throwing more fuel on the fire during "good" times (or maybe I should say the "better" times). Keynesianism doesn't recognize that government can inherently grow the economy, but it does recognize government spending policy can add stability, helping to minimize the highs and the lows.

    If we do not try to lower the highs, we cannot mitigate the lows.
    Spending excessive amounts, more than the economy can support (looking at a longer term frame of time) is not going to be good.

    The trouble is, when the economy goes down, from something that has been permanently damaging to the economy, how can we know for sure what the economy is now "capable" of? How do we know what the target should be? Since we don't want to try to stimulate the economy beyond that target point, and it likely won't be as high as the economy was before.
     
    Last edited: Apr 12, 2021
  11. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    And if the economy does crash, they'll probably blame the rich and not spending more, rather than blame spending too much.

    YES, too much government spending can lead to an economic crash.

    An economic bubble can be formed from too much stimulus. When the bubble inevitably crashes, it won't be fun.
     
    Last edited: Apr 12, 2021
  12. wgabrie

    wgabrie Well-Known Member Donor

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    A lot of people have racked up debt to help them weather the financial storm caused by the Coronavirus shutdowns. The stimulus bills helped, but, unless the people in distress have a rich relative to bail them out or a well-paying job, they will need to declare bankruptcy to see them through to the other end.
     
  13. Tejas

    Tejas Banned

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    How about a Biblical year of Jubilee? Ironically, this past covid year also seems to dovetail.

    The Year of Jubilee, which came every 50th year, was a year full of releasing people from their debts, releasing all slaves, and returning property to who owned it (Leviticus 25:1-13)... This year was also dedicated to rest... During this year, the Israelites were not supposed to reap or harvest; it was a time for people to return to their families and loved ones.

    https://www.christianity.com/wiki/bible/what-was-the-year-of-jubilee.html

    .
     
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  14. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    The "year of jubilee" was an excellent economic innovation for its time. It limited debts, and ensured people could not be trapped into long-term debt slavery.
     
    Last edited: Apr 13, 2021
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  15. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    But that just aint-gonna-happin!

    It may disappoint you to know that the economic previsions are for excellent growth in the rest of the year!

    See here: US Economic Outlook - and, yes, most of that is due to the new stimulus-package.

    Ho hum ...
     
    Last edited: Apr 13, 2021
  16. wgabrie

    wgabrie Well-Known Member Donor

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    Oh, the Year of Jubilee is the 50th year. I thought it was 7th year. I just learned something.
     
  17. Tejas

    Tejas Banned

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    Both are part of God's same release and reset.

    Every seven years the land is to lie fallow and the people eat what only God provides from the land... and per Deut 15, creditors are told to release debts of the Israelite poor.

    Interestingly, God's ordained 70 years of Babylon's draconian rule over Israel was related to the land sabbath.

    To fulfil the word of the LORD by the mouth of Jeremiah, until the land had enjoyed her sabbaths: for as long as she lay desolate she kept sabbath, to fulfil threescore and ten years. 2 Chronicles 36:21


    Seven sevens is 49, then the special 50th Jubilee Year which is an even more radical reset. See Leviticus 25.

    And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof: it shall be a jubile unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family. Leviticus 25:10

    Interestingly, part of Leviticus 25:10 regarding the Year of Jubilee is engraved on the Liberty Bell.

    Proclaim liberty throughout all the land unto all inhabitants thereof

    .
     
    Last edited: Apr 13, 2021
  18. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    BELIEF IS NOT FACT

    God who?

    There is no proof whatsoever that a "God" exists. Which is why "God" should not figure in the establishment of country. (And this notion is coming to you from someone who DOES believe in a God.)

    The point being that Belief Without Proof acceptable but an insufficient basis upon which to make laws that apply generally to mankind. They are "beliefs", which we all have the right to adopt and espouse. Or refuse.

    We have no right whatsoever to assume that they must be the foundation of a nation, applicable in all circumstances and to all people. (And always the "same God".)

    We are now TWO CENTURIES beyond those times when a belief in god was primordial and encapsulated by the fact the Head-of-state was crowned by a priest!

    Sorry, but that was long, long ago. We-the-sheeple have since evolved as humans. If you wish to remain with your belief in "God" then the state must not interfere with that intellectual freedom-of-thought.

    But neither should such a belief - based upon history but of no-factual-evidence - be enshrined in the Law of the land ... !
     
    Last edited: Apr 13, 2021
  19. Tejas

    Tejas Banned

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    The vast majority of American colonists and founders of the USA believed in God.

    When America was being settled, pioneers took the Bible with them. Pioneer parents taught their children faith, obedience, morality from the Bible in addition to how to read and write.

    As I previously posted...

    Interestingly, part of Leviticus 25:10 regarding the Year of Jubilee is engraved on the Liberty Bell.

    Proclaim liberty throughout all the land unto all inhabitants thereof

    .
     
  20. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    Belief is uniquely a matter of historical personal conscience/belief. The bible was conceived in the Western Hemisphere.

    Those of the far-east did not need a bible to understand that "Thou shalt not kill" and the Ten Commandments are unknown amongst a population of people considerably larger than ours in the Western Hemisphere.

    Who have the very same principle ...
     
    Last edited: Apr 13, 2021
  21. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    Belief in a supreme-being who guides our lives is just fine. If it pleases you.

    But, let's not make laws based upon "gods" of any nature - and there are good many of them.

    At the end of the 16th century in France there was a belief in one god that created the cleavage by two different groups of people. It led to a series of wars over the latter half of that century that took 8-million lives before it was spent. Which created the permanent cleavage between Protestants and Catholics.

    Can't happen again? Oh, yes it can. Human beings are "funny" that way. Nowadays it's the Middle-east and "wars" amongst the Muslims.

    All in the name of "their particular God" - and they call that a "religion" ... ?
     
    Last edited: Apr 14, 2021
  22. Pro_Line_FL

    Pro_Line_FL Well-Known Member Past Donor

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    It's their professional opinion, not to be confused with Biblical prophecies.

    Here is another one:

    The economy is on the cusp of a major boom and economists believe it could last
    https://www.cnbc.com/2021/04/09/the...oom-and-economists-believe-it-could-last.html
    • The economy is just starting a boom period, where second-quarter growth could top 10%, and 2021 could be the strongest year since 1984.
    • The second quarter is expected to be the strongest, but the boom is not expected to fizzle, and growth is projected to be stronger than during the pre-pandemic into 2022.
    • A period of supercharged growth is just starting, and it is showing up in surging consumer spending and in an increasing shortage of skilled workers.
    • With surging demand could come inflation, something the economy has avoided for more than two decades.
     
  23. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    THE FUTURE REMAINS ONE BIG GUESS

    And here is my professional opinion regarding their professional opinion. Professionally speaking of course!



    It could, but likely will just be a decent 5%. All those people who lost their jobs must be rehired and put to work. That's not going to be performed overnight. Let's hope I'm wrong.



    The actual growth that the US is enjoying today started a while back. I figure it can keep going as more people enter the workforce once again, but - as I said - the growth will be decent but not "double-digit".



    Well, I hope not because that would seem like "Zoom 'n bust" and that is not what America needs. Just conventional good growth will do (5 to 7). One that puts people back to work so that they can get over the horror that possessed a great-many during the turn-down.



    And it will keep avoiding for as long as it also avoids splurging. Which some will do to "celebrate" the return to normalcy.

    Let's just hope that we get back to solid 5 to 7% growth because there is a more predominant factor entering the economic-equation.

    Which is the fact that the old-jobs at the lowest level and employing low-income workers will diminish further. Those jobs are gone and low-level manufacturing work will shift out even faster now that they've been shut down - and companies will not want to finance them any longer.

    Replaced by what? Higher level and higher-paid work. But that will require a work-force enhancement in skills. I suggest that this administration start thinking seriously of funding free post-secondary education. This will give our workers the higher level skills that the New Economy will require both at the lower and higher levels ...
     
  24. Pro_Line_FL

    Pro_Line_FL Well-Known Member Past Donor

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    No, they don't all have to be hired back to hit 10% in one quarter.

    Total growth in past 4 years is 1%, which is beyond anemic. Of course 2020 was worst of all, but even without that, the growth has been fairly anemic.

    They predict 10% for one quarter and then several years of good growth.

    Splurging brings the 10% growth. It is happening as we speak, because spending has accelerated.

    7% is not possible in the long run, and even 5% is unrealistic. Steady 3.5% would be good.

    They need to re-think all levels of education.
     
  25. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    Not all growth is good. Because, for the most part, splurging is not just buying a new Chevy but also a Lamborghini.

    And, frankly, the bother with reading the "growth numbers" in an economy should be at the Income Level variations. From where does the "growth" come? (Which is a question that bothers economists the world over.)

    Well, here's what I found: The 5 Industries Driving the U.S. Economy

    Excerpt:
    The U.S. economic recovery was in full swing during the decade following the Great Recession. Before the recent COVID-19 pandemic, jobs were being created by the millions, and wage growth was on the rise. What industries propelled America’s self-contained economy?


    It is at this point (above) that the text goes into a fuller description on an individual sector-basis. I leave those interested the above link for further reading.

    But I will leave those interested this short-quote from the article:

     
    Last edited: Apr 15, 2021

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