Less Growth - More Government: Letters to the Editor: What Kind of Growth Is Sought? - WSJ.com

Letters to the Editor: What Kind of Growth Is Sought? - WSJ.com

Sadly, you appear to be right on! It's doubtful Obama's policies will produce real growth.

One might add that the other conundrum of the US, Japan and Europe (but not countries like China) is that they take so much of what the worker could earn to support government that the economy isn't really self-sustaining.

The US obfuscated this with the internet and home price bubbles (as did the UK) with large expansions of debt.

Now that bill is coming due.

People somehow prefer to work and get fairly paid for what they do. But, when government decides the worker is either too stupid, uninformed or greedy to deserve to make income allocation decisions on their own, the slow creep of stagnation creeps in. Japan is seeing deflation now. The US can see what happens to such policies at the state level by looking at Michigan, which saw its strong economy slaughtered by myopic union greed and high taxes.

So, we have the Democrats hoping against hope that history doesn't repeat itself and that misdirection will win the day and they can take even more from workers and yet the economy will revive?

History has shown that the economy often does revive (lower taxes have often helped), but history and recent experience (Michigan, etc., the 30's depression) also show that the economy may continue to stumble. To some it's an open guess each way; to others, it's only a question of time and unforeseen events that could turn things around in a positive direction for growth instead of stagnation/depression/inflation.

Here a job, there a job - whoops, there goes another job.

With the Democrats concentrating on adding more labor costs (the healthcare fund raiser currently before Congress) and hearings on capital hill worried more about what the Fed is doing and the bailout of banks by Geitner, it's clear that the real cause of businesses not hiring and expanding with US labor is being ignored.

Thus, the question about where the price of gold will go.

Because, if the administration and the Congress continue on their current paths, then there will be huge debts, likely another economic downleg and in all liklihood the necessity of having the Fed cover even more of the government's borrowing costs.

None of this is good for jobs - but they just don't seem to be applying any logic. Ah well, they learned from the UAW and the other unions, so what does logic matter. It's all for immediate gratification.

Is there a Mystery

The Dollar as the Common Denominator

Stocks, Currency See Close Relationship; 'The Sheep Effect'
http://online.wsj.com/article/SB125710221903421357.html?mod=djemTEW#articleTabs%3Dcomments

Let's take the three basic forces - (1) people tend to extrapolate from the recent past; (2) the US gov't is running an outsized take of US GDP and this in the past has always portended a slowdown of the real economy; (3) there is an outsize effort to try to obfuscate the overindeptedness of the consumer and the economy, and the overspending of government; (4) there are lots of specific governmental policies that militate against employment, etc.

Thus, while Shiller was on CNN saying that the human factor made economics difficult, the above factors all lead in one direction.

Admiittedly the timing and the resiliency of the existing economy are questionable; but, the direction is clear.

The US doesn't want to address spending too much on social spending and the economy can't ever recover with the government taking the amount of it that it is - that is, until a very sorry bottom or policy change takes place.

Thus, the value of a few US assets may be sustainable; but, otherwise, the US is at the top of the pyramid and the value of its assets and currency will be falling.

It's as simple as the farmer who can save and plant 10% of his/her past crop vs. the farmer that can save only 6-8% or the farmer that can plant 12%. Thus US is the 6-8%. 10% is needed for equilibrium and over 10% there's growth.

Sadly, the Obama admnistration (not unlike the UAW and other unions) believe current consumption trumps all. So they take from what needs to be saved and reinvested. Perhaps this is wrong. But, the situation with GM and the current healthcare proposals would say the opposite! Who knows, maybe there's a fairy who can wave its magic wand and produce abundance out of squandering?