I love Paul Krugman’s work, precisely because it is correct, simply corrupted by his education. He was taught that more Cash during a downturn was the Answer for everything–a.k.a. Keynes–and that there was no limit to the potential largesse. He fails to understand that there are limits to the amounts which can be paid for production materials and labor, and that Stimulus over a set amount will only artificially hide Production declines by claimed business Profits. Less Product is produced, less Product is planned for, and less Product is delivered; but business proclaims record Profits. I hate to reveal this to Paul, but it does not make the economy better for the expenditure.
I know that this is a hard Concept to accept, and even more hated; but Stimulus must be driven from the ground up. This means that the Cash has to be delivered to the Consumers. Business will be already growling in anger, but it is to be expected. They will say this requires Tax Cuts for business, when nothing could be further from the truth. Such Tax Cuts only enlarge the Profits of business without any incentive to Invest, unless there is apparent Consumer Demand. The later will not be evident until there is a reduction in Household expenses. Stimulus under these conditions mean only that the Rich get Richer, while the quality of life declines for the greatest number.
What are the Options open to stimulate the economy? I like a moderate increase in Minimum Wage, something which produces a shelved increase in all Wage scales as Business pays for expertise. I say moderate increase because We do not want any increase in Consumer prices if We can help it; Business will scream, but the increase should be planned to not lose Business more than 3% of their Profitability. One of my most favored types of Stimulus is federal assumption of State and Local governmewnt expenses, but only if the local government authority can prove a reduction in Property and Sales Tax levels by the replacement. There are other Means at economy policy operations; I only wanting to outline the potential for achievement in this area. lgl
2 comments:
The Nikkei Futures: Saturation Macroeconomic's x/2.5x/2x Skeletal
Structure on a Day Unit Basis: Confirmation of a Patterned
Macroeconomic Science. [
Jul 24, 2010 8:13 AM
The Nikkei Futures: Saturation Macroeconomic's Empirical x/2.5x/2x
Growth Skeletal Structure With Ideal Elegant Evolution in a Day Unit
Three Phase Fractal Series
Confirmation of a Patterned Macroeconomic Science.
The Wilshire's 11 October 2007 nominal high was prospectively
predicted by the new science of nonstochastic saturation
macroeconomics.
Nikkei Futures: x/2.5x/2x :: 8/20/15 of 16 days with possible
extension to 2x-2.5x of the third fractal
In the main page of The Economic Fractalist
www.economicfractalist.com/ the Macroeconomy's underlying Growth and
Decay fractal pattern is defined.
"The ideal growth fractal time sequence is X, 2.5X, 2X and 1.5-1.6X.
The first two cycles include a saturation transitional point and decay
process in the terminal portion of the cycles. A sudden nonlinear drop
in the last 0.5x time period of the 2.5X is the hallmark of a second
cycle and characterizes this most recognizable cycle. After the
nonlinear gap drop, the third cycle begins. This means that the second
cycle can last anywhere in length from 2x to 2.5x. The third cycle 2X
is primarily a growth cycle with a lower saturation point and decay
process followed by a higher saturation point. The last 1.5-1.6X cycle
is primarily a decay cycle interrupted with a mid area growth period.
Near ideal fractal cycles can be seen in the trading valuations of
many commodities and individual stocks. Most of the cycles are
caricatures of the ideal and conform to Gompertz mathematical type
saturation and decay curves. "
Observe the Daily Nikkei Future's patterns which is a trading day
behind the Euro-US equity valuation market.
8/20/15 of 16 days with a nonlinear drop between day 16 and 17 of the
second fractal - exactly defining the nature of a second fractal.
The15 day third fractal of the 8/20/15 of 15-17 day is composed of a
3/8/6 of 6-8 day x/2.5x/2-2.5x fractal with a nonlinear drop between
day 7 and 8 in the 2-2.5x time frame of the third 15 day fractal's 8
day second subfractal (3/8/6 days) sequence.
I love the previous comment in its sincerity, but it doesn't explain Why the Labor force employed is in decline, nor any straight Production quantities defined. We are basically in a sterile economy right at this moment, and the decay is obvious, though the increase is wondered as to existence. lgl
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