Monday, February 14, 2011

The Solution--Simple!

I consider all arguments to be a ‘Tempest in a Teapot’. It is not the proportional nature of the decline, or the lack of such proportion, the reality is a reduction in all Employment throughout the sectors. The Concept that education and retraining exist as Solutions for the Unemployment must be discarded. Economists all look to inflationary Wage rates which suppress Employment. I would rather turn to suppressed Interest rates which holds down Consumer Demand (Most would disagree, simply because they always insist on the inclusion of Big-Ticket items). This I believe is foolish. The suppressed Interest rates support Product pricing throughout all Product lines, and only make a marginal difference in purchase of Big-Ticket Product; here, Purchases stand essentially based upon long-created necessity. Interest rate suppression affects all Product lines, though, and bring Resistence to lowering Product pricing specifically in those sectors of immediate need–namely, Food, Clothing, and Short-Term Household needs. The later sectors are where We get the consistent Consumer Demand volume, and greatest reaction to market demand. Suppressed Interest rates destroy the flexibility of those markets.

The previous contemplated Studies which had little relevance because of erroneous formulation of the Problem; this Post examines a statistical study where there cannot be real benefit to economic policy formation. Two years is too long an interval to expect genuine policy effect; there being far too many forthcoming distortions, while examination over time cannot adjudge the effectiveness of the policy. This means the medium strength correlation is so slight that minimal economic shocks could alter the outcome to a negative correlation. So much of Economics continues to be the correct Outline of the Problems, then essential decision of What is being decided.

I will finish with this Post, which poses the right Questions, but no Solutions to those Questions. The budget deficit will never be resolved without an increase in Taxes. Entitlements will never be paid adequately until the benefits are uniform and limited in total amount per individual. Defense will never become a sound element in a sound budget, until and unless Generals give up their expensive Toys which never work effectively without decades of R&D, and Corporate leadership cannot buy political influence. We need to Downsize the federal government, and state governments, and local governments; ??–even regulatory agencies. We need to do this without getting the benefits eliminated, just the deadweight of excess payments, excess labor positions, and excessively priced supply contracts for Government programs. lgl

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