Thinking Things Over April 1, 2012 Volume II, Number 13: Say’s Law and Stimulus Spending to End Recession: Why It was Doomed to Fail By John L. Chapman, Ph.D. Canton, Ohio. So then you get the argument, well, this is not a stimulus bill, this is a spending bill! Well, what do you think a stimulus is? [...]
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It was back in 2009 that Bill Gross coined the term New Normal to describe the post-crisis US economy. That economy is marked by a reduced willingness to take risk in the private sector for a variety of reasons. No interest rate is low enough to induce corporate spending in an environment where aggregate demand [...]
The FOMC policy statement confirms without much doubt that there has been a major shift in conditions and outlook. To reiterate in what cannot be overstated, the purpose of implementing QE was to create economic conditions that conformed to the historical understanding of economic growth. If not so much 1995, Bernanke’s FOMC wanted to return [...]
While there are revisions to be made, and further revisions of those revisions, last month’s payroll report identified, unfortunately, what many economists are using for the “finish line” in this “recovery.” It is estimated in May that the US economy finally, ploddingly, regained the number of jobs it lost in the Great Recession. It took [...]
The balance to all the policy of “good feelings” is the actual ability to spend. Orthodox economics resides on the demand side, which explains much of these persistent problems, yet there is a low degree of realization about getting from A to B. As I said earlier, modern central banks are about manipulating expectations, really [...]
The primary argument in favor of “aggregate demand” policies, or at least attempts at demand-side “stimulus”, amounts to putting more money into the economy as spending. You hear it all the time, as in give money to people that do not have it now and they will spend it, thus creating a “pump priming” that [...]
The term consumer exhaustion can apply to several circumstances, but typically they all relate to exhaustion of resources. Households can appeal to wages, transfers, savings or debt, and usually some combination of the four, to maintain living standards and discretionary budgets. So exhaustion, like that of yesterday’s GDP, could be due to any one segment [...]
By John L. Chapman, Ph.D. Washington, D.C. May 28, 2012 The current debate in Washington over fiscal policy parallels that of the Presidential campaign: how do taxes and government spending affect the economy? Does more spending “grow” the economy, as modern-day Keynesians suggest? Can progressive tax increases benignly cut any government deficit? Both theory and [...]
By John L. Chapman, Ph.D. Canton, Ohio. May 5, 2012 The U.S. economy added 115,000 non-farm payroll jobs in April, and the unemployment rate fell to 8.1%. We analyze what this means ahead of important weekend elections in Europe. The Department of Labor's Bureau of Labor Statistics released its April jobs report Friday morning. Here are [...]
Thinking Things Over April 22, 2012 Volume II, Number 16: Monetary Policy, the Real Economy, and Asset Prices: Where are We? By John L. Chapman, Ph.D. Canton, Ohio. In the wake of recent market volatility, and ahead of the Federal Reserve's Open Market Committee meeting here on April 24-25, calls for another round of Fed easing, "QE3," have again [...]