I explained this in-depth many times over the years, so I won't do again. Basically, the economy is running on debt. The deficit accounts for 10% of GDP and QE, another ~3%. Reputable economists peg the "knock-on" effect at around 1.7 - 1.8. Iow, for every dollar borrowed and spent into the economy, it generates ~1.8 dollars in economic activity (baker pays the miller who pays the farmer who pays the bank who pays their employees who buy bread). That means without the deficit and QE, the economy is more or less deficient by 22% GDP. In a deflationary collapse, the FIRE sector, which comprises roughly 25% of all economic activity, gets absolutely decimated. Real estate, banks, and insurers (who now underwrite all types of security and debt performance), get creamed. Under an inflationary collapse, which is most likely (because Banks own the FED who dictates policy), foreign investors dump treasuries, the Fed monetizes, and the dollar loses reserve status. This isn't some trivial event. The premium built into reserve status could be upwards of 30-40%. Plus a severe devaluation. Wages are sticky, prices aren't. US prices could easily double and wages remain stagnant. In that case, consumers buy only half as much and a Depression results, it just looks different. Same thing happened in Zimbabwe and Weimar, although to a much greater extent. Qualitatively, it's different (inflation versus deflation). Quantitatively, it's the same (a massive depression). As for your topical refutation, it means jacksquat. There is nothing complicated or esoteric about my analysis. I used a simple GDP formula + the knock-on effect + some facts about the economy. That's it. It's easy to tell who the pretenders are when it comes to economics, because they don't recognize a simple GDP formula when they see one. Econ 101. It's ironic that all "numerical projections" are bullshit, yet you put your faith in Keynesian economists, who use numerical projections. They just get it wrong most of the time (not that you care). Anyway, you guys can say whatever you want. Our future is being played out in the European periphery right now, and theirs was played out in Iceland. The Kroner depreciated what? 50%? in the span of a couple months and their economy contracted more than 20%. Mind you, Iceland could pass for an agrarian fishing village. What I mean by that, the fallout of 300K getting the gears is easier to ride out than a deeply fragmented nation of 300 million, with less than 2% of the population agrarian, and over half on some type of Government welfare. It's jokes. And you post a youtube clip of some random beer commercial, as if that proves anything? Anyway, this is why the Country is going to shit. Because "smart guys" refuse to learn the basics and put all their faith in highly educated idiots who routinely get it wrong.
1. Great post. 2. But, I believe the "knock on effect" is inflated. Govt spending dollars in this debt bloated economy are nowhere near that effective at the margin. If Obama had done what he promised... build infrastructure.. maybe. If Obama had gone single payer and relieved business of medical expenses maybe.. but solyndra dollars probably have negative knock effect as it would scare out real investment into real companies. 3. Keynes stated the way to deal with a financial crisis like ours is to cut taxes and grow out of the problem. Keynes is boatloads smarter than any the leftist clowns using his name now.
+1 Brass is by far the dumbest person on this site when it comes to grasping concepts about economics, he is simply far to limited in his knowledge of economics to have an intelligent debate. Plus he is a useless troll, so you are pretty much wasting your time with him.
Jem. Perhaps it is? Perhaps it isn't. Difficult to say. Even if it's lowballed, say at 1.4, it's still a 19% contraction PLUS the loss of reserve status and dollar devaluation. None of this ends well. You're right to suggest a spectrum of scenarios (running from best to worst). Well, even in the best case, we're looking at a contraction of ~25%. The peak-to-trough contraction in '08 was ~6%. So roughly, four times worse.
And what's really funny is that horse's brASS claims to be more educated in economics than most here.
lol Seems most of lefties around here don't get basic economics (Freethinker, Brass, AK, Futurecurrents). Which maybe explains why they're lefties, to begin with?