Richebacher article on False Panacea, worth reading, short
on false view toward productivity, he says...
There seems to prevail a widely accepted view that credit creation makes old-fashioned saving from current income superfluous. As to the equal utter lack of interest in capital formation, the apparent explanation is a singular focus on productivity growth. Why are saving and investing even necessary, if the U.S. economy is enjoying stellar productivity growth without them?
What's wrong with this view? In short, everything. It's macroeconomic nonsense.
Productivity growth is not the panacea for which American policymakers and most economists seem to take it. If there is insufficient demand, as today, increasing productivity can only result in increasing numbers of unemployed workers, declining capacity utilization and, ultimately, slower growth.
What really induced generations of economists of all schools of thought to elevate saving to an indispensable, key condition for economic growth? The basic reason is that it is the limiting factor for capital investment. Short of nirvana, all resources are scarce. Due to this elementary wisdom, new capital investment can only come about to the extent that somebody makes the resources for the production of the capital goods available. That somebody happens to be mainly the consumer. By saving, that is, by spending less than he earns, he effectively releases the necessary productive resources for investment.
But this necessary release of productive resources is true only for saving from current income, coming implicitly from current production. The attendant release of resources is what makes this kind of saving indispensable for investment and economic growth.
on double dip recession focus being off the mark, he says...
A lot of energy has been devoted to whether there will be a double-dip into recession. This is the wrong question. What really matters, instead, is whether capital spending will rebound after its steepest decline in the whole postwar period. This is also a question that can be answered with reasonable foundation from the available data.
If yes, the U.S. economy has a chance for a sustained recovery. If not, it will be Japanese-style near-stagnation and sub-par growth for years to come. We think the prevailing conditions speak overwhelmingly for the latter.
full article:
321gold.com
I could not get any discussion on this excellent article on the Jackass threads
silly people, results oriented, not effects focused
/ jim |
