You act as if the majority of Americans are unemployed. That obviously is not the case. There are plenty of Americans that continue to be EMPLOYED. They are paying down debt, increasing their savings rate, are being cautious with their spending, but continue to work and receive a paycheck! Should their confidence in the Economy improve, they will increase their spending habits. Since 2/3'd of the nation's GDP is tied to consumer spending, confidence and PSYCHOLOGY play a most important factor. You act as if the Economy cannot even begin to recover without the unemployment rate dropping back down. That's simply NOT true.
great points. although the points i made on the economic working of the situation would have made economic recovery in the near future impossible i am glad that you raised these points to back that up.
Not true at all. The Fed has plenty of "bullets" left, some of which have already been announced, but not used. Have you taken a look at the Fed's balance sheet lately? You might find it rather informative.
the more consumer consumption rises the less investment (domestic) and borrowing there is this will lead to an unbalanced situation like it was before the credit crunch. you will have to borrow money from other countries like china (if they are willing) to provide the investment into businesses and new start ups and you are back where you started dependent on other countries to lend you money. unless you sort out your lending and borrowing balance there will be no long term recovery. simple simple simple economics.
Not true at all. Increased consumer consumption means increased demand for goods and services, which causes corporations and manufacturers to increase their inventories and possibly retool and expand in order to meet demand, which can lead to hiring new workers. Your economic view is far too narrow to even engage in any further discussion.
why is it not true at all. can you back it up with any argument with substance other than. 'not true at all'. the concept is simple if people in america do not invest money in the credit market it means you will have to get it from other countries and they are not very interested in investment in that market at the moment. if the increase in consumer consumption in america is from americans due to them only receiving money from their jobs or savings if they spend more it means they save less meaning less investment domestically meaning foreign investment. if you can get it.
Really now??? That's funny. All of those Treasury auctions last week seemed to go quite well, with DEMAND outstripping the supply as yields continued to decline after the auction. In case you missed it, $35 BILLION of 3-year notes were auctioned, as well as $19 BILLION in 10-year notes, and $11 BILLION in 30-year bonds.
where do they get the money for new tools and to pay the staff. there has to be investment to retool and to expand. although the corporations could save the income they get from increased demand it would be a long winded situation. also expansion on a level to propel the american economy out of recession would take enormous increases in consumer consumption. don't forget corporation have debt they have to pay off too. they will likely pay off their debts before they will use an increase in profits to expand.
so if the american government are issuing treasury bills it means that they need investment from outside the us and that confirms my point in relation to american consumer consumption not being sufficient to get the economy out the the rut it is in.
Not true on ALL points. You seem to discount the FACT that there is a tremendous amount of overcapacity out there right now in the economy. Inventories are extremely LOW. Any kind of "uptick" in consumer demand will cause quite a big rebound in the Economy. As to your last point, Corporations don't have to pay off their long term debt unless it makes economic sense to do so. With rates being so low, there really is no incentive for them to do anything OTHER than roll-over their debt . . . not pay it off.