My point in the initial post was that aggregate demand could be generated through increasing investment rather than foreign consumption. Capital goods are goods too, they increase demand and create growth and enable new growth. So my point was two fold one without the ability to enable new growth through capital investment there would be no recovery no matter where the demand came from and the second part is capital investment is demand in itself and has been ignored in preference to QE. He has probably triggered a price war through a currency war which he cannot compete in when he didn't have to in the first place. Poor strategy in my opinion.
For the record, I was responding to "sosueme's" post, not yours. I think you knew that, but just to clarify.
I am going to argue that inflation and stagnant wage equal lower cost. Of course, this is only true if you are selling into that inflation sector with pricing power.
It may but you could lower it further. If you are a business and you want to invest somewhere you will do a cost estimate if there are lower costs in A than B you are likely to invest in A. The unemployment is an opportunity to the country they are a skilled work force and are willing to work. Yes the labour market is low cost but that is just the pay what about social security or employment taxes. If the government cut them reduced them in the areas of unemployment it would make that area more appealing for investment.
Yes I also wanted to clarify. It is a dangerous game Bernanke is playing and it isn't even necessary.
But what has all to do with B and his QE2 ... this is a Fed and State challenge to create more enlightening employment conditions.
Yes but it won't work under these market conditions. Is what you are really saying is that it is not the Fed but the Government that is failing?
The means is not the problem. The ending is. You want to "control" the so called "aggregate demand". DO NOT Why has no one else appreciated this.