Sssh! Quiet everyone! It’s a secret, the American economy is booming. With the exception of China, the rest of the world’s largest economies are on the precipice of another recession.
What about the United States? Unemployment is 5.8%, the stock market, which is a barometer of the economy, is setting records, interest rates are down and debt in relation to the GDP is growing ever lower. Why is that?
Republicans claimed that the ACA would ruin the economy with incredible job losses. Republicans told us that government was not the answer and that economic stimulus would lead to inflation. Republicans have told us that we should do away with the Federal Reserve Board. They have told us that President Obama is a failed President.
With this type of failure one can only imagine what our success would be like if only Congress would cooperate and rebuild our infrastructure. If only Congress would join in with the President to raise the minimum wage, we might even see all Americans join in the American great success story.
Americans are finally getting it as consumer confidence reaches 90%.
Cheaper oil has contributed to a lowering of the price of gas at the pump and a better balance sheet with less money going abroad and more money for investment staying home.
Finally, we see American Corporations re-investing in new equipment instead of hoarding money. Perhaps they will contribute to the last piece of the puzzle by paying American workers a better wage. More money in the pockets of the American consumers will only come back in the form of more goods bought here at home.
The President all along realized that what we needed was a growth policy and a little of John Maynard Keynes economic policy mixed in. The Federal Reserve Board and the President knew what was at stake and they acted with rapidity to beat down the greatest threat deflation.
The Federal Reserve Board stimulated the economy by keeping interest rates as low as possible. Along with that, they used the tactic of quantitative easing by purchasing long term bonds. Their purchases ended in October. Where are the Republicans who claimed that what we would get in return was gloom and doom? The economy is booming, and we have no inflation. The dollar is stronger than it has been in some time. The Federal Reserve Board under Bernanke from the outset knew that what the United States faced was deflation, not inflation. Deflation is the greatest threat to any people or economy. When your incomes are too low to buy the goods, a race to the bottom occurs to find a place where incomes are sufficient to buy the goods. Bernanke saw the need to try to create inflation in order to keep the dollar from sinking into the abyss.
Europe is finally getting it. I hope it is not too late to avoid another serious recession. Led by Germany and the Austrian School of economics, austerity was used as the tactic to combat the recession. What austerity and shrinking government got you were more cuts and less revenue. The lower the revenue the more difficult it becomes to maintain basic public services. Now they finally realize that their greatest threat is deflation and they now see their greatest challenge is obtaining a plan to grow their respective economies.
Europe is sinking, Russia is collapsing and Japan sees their economy shrinking.
The dollar as measured by the DXY shows the value as compared to other currencies at its strongest level since 2006. Actually the plus for American tourist abroad who see their dollar go further could eventually be a problem because that means that the costs of our goods will be higher.
The oil boom in America along with our interconnected transportation system help to explain why manufacturing is coming back to America. Americans are insisting on finding American made products to buy.
For those who seek a further explanation of the world bond market please see, the Los Angeles Times article in the Business Section on December 27th, 2014 on page B4.
For those on the right wing of the political spectrum you are the ones who are the greatest threat to economic security. You lied about the Affordable Care Act costing jobs. For the millions of people who now have health insurance, they will all need more doctors, nurses, lab techs, and all of the various jobs required to keep our health care system functioning. This need for more jobs is a simple result of supply and demand. The millions of new patients will all need more service and people to serve them. Republicans would gut the ACA and cost people their health insurance and their prospects for new and good paying jobs.
Your economics of allowing banks too big to fail without proper supervision brought us to the brink of a Great Depression. If we return to the policies of the Bush administration we will be guaranteed to return to the brink. This would be tragic and insane to think that if you keep trying the same thing that brought us ruin in the past like 1929 or 2008, you can expect a different result.
Republicans have lied all along in claiming that what we needed to recover from the Great Recession was to use austerity. Austerity begets cutting jobs which causes more unemployment which causes more debt. If you doubt the truth of this statement see what has happened in Kansas. Austerity as Winston Churchill once stated only gives you the years of the Locust where we wind up eating and chewing on each other and destroying and shrinking the economy rather than growing an economy. Instead of trickle down you wind up having a flood rising that will drown the economy.
John Maynard Keynes had it right all along. In bad times we need to prime the pump and in good times cut the fat and the inefficient.
But please don’t tell anyone about the secret of our success. If we don’t keep it a secret we just might have to admit the truth. The truth being that both President Obama and the Federal Reserve Board deserve credit for putting our economy back on track, with a future worth living. The Fed has shown us the way on how to eliminate the threat of future recessions. Indefinite prosperity is a not a pipe dream but a real possibility.
Let us hope that in the New Year, the economies of the developed world will learn from our success and they will not try to make austerity work. Let us work together in order to secure our economic futures by using tried and true success stories instead of trying to repeat the failures of the past and somehow expect a different result.