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Politics : Politics for Pros- moderated
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To: LindyBill who wrote (623124)1/24/2017 8:41:57 AM
From: frankw1900  Read Replies (1) of 794162
 
Trump's $10 Trillion Stimulus Plan That's the title.

But this is what it says in the article: Donald Trump is planning a budget featuring $10 trillion in cuts over the next decade.

This will be a disaster for Trump. That lying freak Moore says this is a stimulus. It's not. It's austerity.

$10 trillion in cuts is NOT a $10 trillion stimulus. Moore is full of Orwellian bullshit.

US level of private debt is only 20% lower than at the 2008 crash. As a proportion of GDP it's still higher than it was just prior to 1928 crash. Non financial company private debt is still being paid down and the only thing that has kept the process going since 2008 crash without a DEPRESSION is federal govt deficit spending.

This is why:
Economic growth is created either by federal govt deficit spending (which creates money), or more efficiently (due to better information and feedbacks), by increasing private borrowing from banks (which creates money). The rate of growth depends on the rate of borrowing. When personal and business income constraints limit servicing further debt, then borrowing slows or ceases. And growth slows or reverses, until such time enough bank debt is paid down (which destroys money) or written off, that people or businesses are no longer constrained and will increase their borrowing. So govt deficit creates money and puts it into the economy even as private debt repayment destroys it and takes it out of the economy.

Because not enough private debt has been paid down this is no time for the federal govt to suddenly reduce deficit spending.

The recent hot money enthusiasm we see in the asset markets is ultimately based on expectation of a Trump stimulus of huge infra structure spending. I'm not talking about bridges to nowhere - the US infra structure is degraded and US could spend trillions just repairing it, never mind upgrading it.

Moore is drinking the economic Koolaid. The Europeans drank it* and they are dying. Why should anybody else do it?

..............................................................................
*Except for Germany, which is exporting its way out of it by imposing this horrible austerity regime on the rest of the Euro currency zone and getting away with it exporting from a devalued Euro. A Euro devalued due to the economic failure Germany has imposed on its fellow members. And by outsourcing its parts making in low wage Poland, Hungary and Romania. And exporting to where? To the UK, US, and Canada.
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