Reality in the Land of Illusion

I understand where Tyler Cowen is coming from, but will state my reasons to aggregate. You must read his Post to understand what I am talking about. All three reasons- general decline, wealth service decline, and Inventory pre-exhaustion–all lead to labor layoffs, which relatively never return until a return of factor 2; leaving aside the creation of a new industry sector. No form of financial Stimulus aids the disenfranchised labor pool, or does it dispel the disinclination to rehire without great growth ratios. Support of factor 3 stands as evident failure with a general decline in consumption–a persistence which will continue as long as the unemployed labor pool remains as large. Tyler states that current economic policy would be more refined with the three factor being weighted for their impact. I know that factors 2 and 3 will always be canceled out by factor 1: 2 and 3 if and only if 1. Factor 1 is thereby the paramount datum.

This looks right, but does not feel right! Consider placing an equal time Employment line overlaid on the graph. I will not supply it of course, as I attempt to be graphics illiterate to as great a degree as possible. It is known that We are developing a Well of Unemployment; there are as many evaluations as there are economists, but I suggest a total of 22 million Unemployed since 2000. The Inflation rate since 2000 have adequately adjusted for the loss of Consumption from these Workers, and this may the real reason there is such anxiety over the potential disinflation; a factor which could actually highlight the real stress in the economy. The thing to do here is scale current GDP in 2000 dollars. Economists are universal in stating our economic woes stemmed from the last Recession, but I think they have been developing for a lot longer than that.

I will finish this Post with this link. I admire John Maynard Keynes as much as any man, but he more than anyone was a man of his Times. He learned his Economics in the WWI environment, was later faced with the financial crisis of Europe after the German defeat, ran into the Great Depression, later faced with the Second World War, and finished trying to correct the aftermath of that great economic, as well as Social, debacle. At no time in his life could it be said that Keynes reacted to a normal economic environment. His entire thesis of Stimulus pump, though seriously revised over time, was material for an over-stressed economy, never one which failed normally through erroneous capital concentration. It is my thesis that Recessions incited from capital misallocation will not respond to Stimulus–Call me the Devil with Horns. lgl