Beet
Atlas Star
Posts: 29,018
|
 |
« on: March 18, 2004, 05:24:27 PM » |
|
Right now monetary and fiscal policy is at its loosest is more than a generation. The gap between nominal GDP growth and the federal funds rate is bigger than at any time since the oil crises of the 1970's. The Federal Reserve, the Congress, and the Presidency, are borrowing, spending, and basically doing everything possible to grow the economy.
The problem is the economy is growing but not generating any jobs. The reason is a massive surge in productivity. Standard economic theory says that this is good in the long run. Yet this recovery is unlike anything we have already seen. At this point in previous recoveries, some 4-5 million new jobs should have been created by now. Real income should have grown twice as quickly as it has been growing. Instead, increases in household disposable income has been to a great extent due to the housing boom.
Personally I think that the housing boom is a massive bubble and when it bursts there will be a lot of pain.
|
