On Thu, 11 Aug 2011, Ray Harrell wrote:
Opinions Washington Post
America’s debt is not its biggest problem
By Bill Gross, Published: August 10
[...]
But while our debt crisis is real and promises to grow to Frankenstein
proportions in future years, debt is not the disease — it is a
symptom. Lack of aggregate demand or, to put it simply, insufficient
consumption and investment is the disease. Debt has been simply an
abused sovereign and private market antidote to sustain it. We and our
global market competitors are and have been experiencing a lack of
aggregate demand for several decades. It is now only visibly coming to
a head, as the magic elixir of leverage is drained and exhausted. This
potentially fatal disease of capitalism is a result of several
long-term secular phenomena:
(1) Aging demographics, where boomers everywhere spend less, in
contrast to their youth, as they approach retirement; babies, houses
and second cars shift to the scrapbook of memories as opposed to
future spending power.
(2) Globalization, where 2 billion new competitive workers from Asia
and elsewhere take jobs and paychecks from complacent and ill-trained
40-somethings in developed markets.
(3) Technological innovation, where machines and robots displace human
labor, resulting in corporate profits but declining wages.
The debt crisis as it crests ultimately gives way to these
growth-inhibiting, spending-contractionary secular forces.
What idiocy. A lack of consumption is a direct result of an absense of
funds to finance consumption. If you want the people to consume, you
don't chisel away their wages for forty years while concentrating all
wealth at the tiny tip of the top of the wealth distribution, which
is no longer a pyramid, but more like a trumpet bell. Globalization
may have some effect in retarding wage growth, but no where near enough
to be responsible for the current situation, and really there is nothing
but willful venality preventing a far saner wealth distribution which
would inspire an exuberant economy. Strangle your society, and you
reap what you deserve.
Well, as Churchill said, the americans can always be relied upon...
-Pete
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