How confident are you in the capabilities of the US government to revert the recession?

it will not happen under the current administration

I am very confident the government could restore the economy if the political structure in Washington were’t so toxic.

There are a lot of people that say the government cannot fix things and should not try. But unregulated portions of the economy got us here in the first place. Lots of people criticize, but they don’t offer a rational solution.

So what you guys are saying that they can but won’t.

It’s going to have to work itself out. Whoever is in power at the time will say they rescued us.

@woodcutter How do you know this isn’t a slowly downward spiral to the Great Depression. Food prices are expected to increase over the next few years across the world.

@atlantis I don’t know that it’s not. I hate to even think this but maybe a depression is what the world needs right now. It appears that the free market economies have failed or are failing so there is going to have to be a reboot, something different may come of it. Right now the only people who are doing well are the very rich. To them nothing is wrong and nothing needs to be done. That’s an easy position to take when you have so much that even a depression won’t hurt them that bad. The lop lopsidedness of the incomes is a real fun ride for the super successful and they’re loving it right now. Their sub conscience is telling them this can’t continue the way its going without a collapse but none of them want to be the first one to stand up and say enough is enough. That is the culture in charge now.

I think there is a concerted effort from the Republican party to hamper recovery for political gain.

@woodcutter You do realise that once we go through a world-wide, protracted recession/depression we will not be able to recover our pre-recession levels of economic growth or GDP or personal wealth. It will make all of us poorer, even the rich will see a fall in their standards of living.

Resigning yourself to complacence about a world-wide depression is really defeatist isn’t it?

@johnpowell Do you think they might be elected into government on that basis? And will they deliver?

@atlantis I didn’t say a economic collapse will be pretty. It would be a different world for I don’t know how many generations. The rich would surely lose more than the working class( who by that time will have lost everything) and many would probably throw themselves off the tops of their own highrises. But all in all, they would still have more of the basic necessities of life even though it will be very uncomfortable for them. We haven’t even scratched the surface of what kind of civil unrest will unfold in the world’s supposedly most civilized country. It will definitely be a survivors world in those times..

So confident that I chuckled after reading the question

The “magic cure” the republicans have and always have had, is to stop taxes on the rich and take away social programs for those who depend on them. There, everything will be fixed. If they try to mess with medicare they will probably lose the House. A lot of older conservatives are dependent on these programs and they will have none of that. The old are the one’s who vote consistently. That is why I think the right is bluffing when they even bring that idea up.

@woodcutter So you think the Obama administration is going to be voted back in for a second term as a lesser of two evils?

I couldn’t open the link. The government really has limited capability, especially now, to effect the recession. Government can increase the monetary supply by lowering interest rates, and borrowing and spending money. That has the effect of more money in circulation. The downside of this is that this policy is inflationary in the long term and increases the debt load, so you’re in effect robbing Peter to save Paul. That’s the liberal way of doing it.

The conservative way of doing it is to lower taxation rates which, in effect, do the same thing of increasing the money available, but that can also be inflationary and also will increase the debt load.

Both policies have their proponents and detractors, and both policies have their benefits and drawbacks.

The greatest threat to our economy in the long term is a crushing national debt. We will not default on the debt (unless Congress does not raise the debt ceiling on August 2) because we can always print money, but again, that’s inflationary.

The government has already done most of what it can—shot its wad so to speak. Interest rates are near zero, and the monetary supply has been eased about as much as it can. The government can do another stimulus, and there is good arguments to do this, but stimulus money runs out after awhile, and then, if the economy isn’t improved, you’re worse off because the debt is higher.

Ultimately what will need to happen is a mixture of spending cuts (mainly in entitlement reform) and revenue increases. At the moment, the spending cuts are more useful for short-term political gain (like funding decrease for Planned Parenthood) than real economic reform. Congress is loath to mess with entitlements, so I fear that we’re not going to get any better.

@atlantis Possibly, but to the average guy on the street there is confusion abound as to which one is least evil. Congress is not highly thought of and a president is but a man, not a deity.

I read a great quote somewhere:

“Even the best engineer can’t stop a catastrophically runaway train.”

I’d ammend it to say you can’t stop a train from doing things intrinsic to its design.

@Rarebear please try this

@incendiary_dan you sound like an austrian school economist. Are you?

@atlantis To quote a song “Baby, I’m an anarchist”. :)

@incendiary_dan I have an anarchist subscript. But I believe in changing the system from the inside :)

What the economy needs right now is stability. We’ve gone through some major changes and political climate is toxic. No business in their right mind would invest in the future in this climate. Some think the changes in the past two years were good some think they were bad. Maybe the spending helped and maybe it made things worse. It doesn’t matter, we are where we are.

We have to do something about the crushing debt but we can’t just turn off the spending without causing more problems. Start with no new taxes and no new spending. Freeze government hiring so that we don’t fire anyone but don’t replace them either. Make a concerted effort to eliminate the redundancy and waste in government. If we can make it clear that we won’t be spiraling off in new directions, the economy can recover. The combination of economic growth and slow decrease in government should buy us enough time to make the budget changes necessary for the future. We can argue about what those are after the economy starts coming back. But the first thing we need is stability and confidence, instead of waiting for the other shoe to drop.

Not that confident. I think they could, but it would mean rising above acting like spoiled brats and working together, and that’s not something most of them care for doing. If they stopped letting their egos get in the way, they could. But they won’t.

Not… at… ALL!

What’s a recession when the ‘debt ceiling’ in the US is $14.3 Trillion? How is this even possible? It’s a boom-bust society we live in, economic growth followed by a much lamented recession, the economy will boom and bust for a long time. I can’t see any other resolution other than the whole western world drowning in it’s own interest-created debt.

I sound like a crazy mayan world-doomer. I’m probably uninformed and naive but really, how else is this all going to pan out? Any factual optimism anywhere?

@trickface It’s a pretty sane outlook. Economies based on constant growth and resource extraction necessarily collapse at some point. The question is what sort of collapse it’ll be. We could see people voluntarily simplifying and converting to sustainable ways of living (many of which actually produce more wealth and higher standards of living, so long as you don’t think an X-box is a necessity), or we can see overshoot made worse.

The government is powerless to avert further recessions because it is being held captive by the right’s refusal to compromise and bat-shit crazy protection of its big spending backers. The right is much more loyal to its financial supporter than to the the American citizens. They have completely given up patriotism for partisanism. Shame on them and on the Democrats that are content to standby and say nothing.

@Ron_C And the democrats don’t have loyalties to their financial backers? Like a certain president who received even more from defense contractors and Big Pharma than his predecessor did? And who places agribusiness execs in FDA and EPA seats?

@Ron_C

I have trouble even believing that you’re trying to lay this at the feet of the Republicans. It was Obama who gave TRILLIONS of dollars away in return for nothing!

The debt simply isn’t a problem. Countries have borrowed far more than we have as a percent of GDP, and done just fine. The Debt problem is a red herring. Someone always comes around to ask ”$14 trillion? How is this possible!” It’s not the amount that is important. It’s how it compares to our earning power. The US has very significant earning power at the moment.

The Republicans, God knows why, think that if they give more money to the rich, it’ll kick start the economy. This was tried by Reagan, and it didn’t work. It was such a failure that Reagan ended up increasing taxes far more than any Democrat since. Why the Republicans want to repeat this stupidity, I have no idea. The only reason I can think of that they would support such silliness is that they are purely venal, and want to put more money into the pockets of their friends—the rich folks.

So they have hamstrung the government, and held it hostage to their pecuniary policies. Or maybe they even believe their own rhetoric, which is far scarier. If that’s the case, then let’s hope they quickly realize how stupid their ideas are, should they take over power in Washington in 2012. I suppose there’s hope. Even the Actor was able to see the error of his ways.

I think they definitely have the capability to reverse the recession, but I don’t believe they’ll fulfill their potential in this case (or practically any other). The government undoubtedly has the tools to balance the budget, to reverse unemployment, to create a more equitable distribution of wealth, etc… But the conceivably medieval fiscal and monetary measures that would need to be taken are unlikely to be approved by either, let alone both parties. A divided Congress is no good during a national crisis, let alone an impotent President.

I don’t know how or why but I have this nagging feeling in my gut that we should go back to the gold standard. Anyone else feeling that?

Glenn Beck does!

I don’t see, really, that the gold standard has any more to do with the present financial crisis than any other single factor. As I see it, faulty fiscal policy is far more to blame than monetary policy, and I think it’s a big fallacy of counter-neoliberals that the gold standard is in some way less artificial than the dollar as a fiat currency.

For starters, there probably isn’t enough gold in the world to cover all of the dollars in circulation—we’d then have to increase the value of the dollar drastically to be able to cover it in gold, or take trillions of dollars out of circulation. This alone would throw global markets into turmoil, to say nothing of the havoc that a deflated dollar price of gold would wreak.

In addition, the gold standard is not truly more stable than an unbacked currency in any sense beyond a lack of volatility in the currency itself. Had the U.S. been on the gold standard in 2008, pretty much everything could have happened precisely the way it did.

One last thing: a gold standard actually restricts a central bank’s ability to effect changes to the money supply. This is something that could conceivably hinder efforts to pull ourselves out of a recession.

@atlantis There are people here on Fluther who will agree with your nagging gut feeling. But going back to the gold standard would be a bad idea. It would constrict the ability for the economy to grow, and it would restrict the ability of monetary policy to effect change.

But that’s a separate question. Even if it were the best idea around, the political posturing in DC these days would mean it wouldn’t get implemented.

@zenvelo You don’t think the de-linking is primarily responsible for the uncontrolled inflation we are going through and will continue to experience in the decade and beyond?

@atlantis That’s just a “natural” part of any economic system based on constant growth and resource extraction. It’s irrelevant to the type of currency system.

@incendiary_dan but abandoning it was a bad idea in retrospect wasn’t it?

@atlantis, I know you didn’t ask me, but I’m willing to come straight out and say yes, runaway inflation is a bad thing. But compared to the other runaway inflations of history (Zimbabwe, the Weimar Republic), ours is nothing special and has been quite skillfully contained. And compared to the potentially devastating consequences of a return to the gold standard, it’s a small price to pay.

@atlantis What uncontrolled inflation? Interest rates are sub 3%. Gas prices have fluctuated but they are down from two months ago. Housing prices continue to decline.

Please, look at the numbers before complaining that inflation is uncontrolled. Inflation today is nothing compared to the Nixon/Ford inflation or the Reagan Volcker inflation.

@zenvelo
I don’t know where you are or come from but that’s how it’s working for the rest (as in not-West)

@atlantis Six of one, half dozen of the other. It’s all a bad idea, having any economy that’s not rooted in the immediate landbase.

@atlantis So can you please point to inflation numbers?

If you all remember, we’ve been here before. Remember Jimmy Carter’s Malaise Speech? It was basically what we’re all saying now. We need to sacrifice, learn to accept less, consumerism is killing us, and we are on the decline. His words were true based on the economic policies he had in place.

But we were able to pull out of that funk. Within a few short years we entered the greatest period of economic growth since the end of WWII. It’s not a question of can we pull out of this recession so much as will we. Carter’s policies didn’t work in the 70s and they are unlikely to work now. Reagan painted a picture of a shining city on a hill and he delivered it. I doubt that another ‘Malaise Speech’ will spark the growth we need. But I do believe we can spur the growth we need. We need a leader that can deliver.

@atlantis, inflation occurs on the gold standard as well. The U.S.‘s not-so-terrible rate is proof that an unbacked currency doesn’t need to result in runaway inflation.

What about the “jobless recovery”? @Jaxk has alluded to it in his earlier reply.
Is it even real?

How would you evaluate this with this ?

It would seem pretty clear that we are entering or at least flirting with Stagflation. Stagflation is low economic growth (we’re just over 1%), high unemployment (9.1%) and high inflation ( At least 4% but could be as high as 9% depending on your measure). Much the same as we had in the late 70s.

The tone and mood of the country seems to be the same as it was in 1979. We need to learn to live with less, We need everyone to sacrifice, the problems are just too big to fix and and a decline is inevitable. As it turned out that wasn’t true. We’ve tried the spending spree to fix the economy, it didn’t work. But just because that didn’t fix anything doesn’t mean it is there is no fix. It just means we need a different policy.

True we’re heading for a stagflation. Also there are reports that at current levels of consumption/production, we are going to need another earth to inhabit by 2030. It’s not population, it’s the balance.

@atlantis

You may be right but I have confidence that as technology advances so do our options. Materials that were unheard of 50 years ago are becoming common place. Plastics and composites are becoming a larger part of our daily lives. Necessity is the mother of invention. Materials that become scarce are replaced by materials that are either more plentiful or are created in a lab. Methods of production for both food and materials are constantly evolving. Growth is not our enemy, stagnation is. IMHO

But that’s the point. We have the technology today, to switch to a green economy but we don’t. And even if we do, will the gains be equally balanced among all of us 7 billion odd humans or will they be used to up the system in favour of a selected few?

@atlantis

New products are always more expensive. When color TVs came out, only the rich could afford them. Same with almost anything that could improve our life. Hell, I can remember when a decent calculator would cost upwards of a thousand bucks. Now you can get one in a cereal box. Medical procedures and medicine that were once rare and expensive are now available to all with much higher success rates. Even information that was once difficult and expensive to acquire, is now available on line to the masses. Places in the world where these advancements are not available are a result of the lack of growth rather than a victim of growth elsewhere. Medical treatments in places like India and China have have made rapid advancements as their economies have grown. Anywhere you see robust economic growth, you will see rapid quality of life advancements for the masses. I think this whole class warfare strategy is misguided and detrimental. Will a rich guy drive a better car than me, of course. Will the rich guy get a private room in the hospital, most likely. Do I see that as a problem, not at all.

@Jaxk You may not see that as a problem when it a guy or two. But what if this was systemic? The basis on which the economy works right now is that most people get by on “subsistence” standards of living. And a lucky few thrive. If we had the magic cure will it be available to a choice few be available to everyone across the board? Because AIDS is a poor man’s disease. I don’t know if they have the same plans for the environmental crisis.

I’m saying this because two people just died during protests over electricity paucity in a small town where I live.

@atlantis

We’ll likely have different solutions to much of this. I’m not sure what you mean by AIDS is a poor man’s disease. In fact I would look at the AIDS epidemic as a monument to what we can do in a society such as ours. With 1.1 million Americans on Aids medication it is widely available. Even in economically depressed areas of the world AIDS medication is becoming more and more available. Due primarily to the benevolence of more industrialized societies. I suppose there’s always an argument that treatment should be spread faster but I’m not sure that making the more prosperous countries less prosperous would do that.

As for any shortage of electricity, the solution would seem to be more production and lower costs. Currently we seem to be moving in the opposite direction. Increasing the cost through taxes and limiting production to much higher cost alternatives. I guess I don’t see the solution you seem to be looking for. Is it really that if we can just make the rich less wealthy, everything will get better?

That’s the “poor man’s solution”.

@atlantis I am curious, where do you live? You ask about the US reversing the recession, but then reference situations as if from another country. I know of nowhere in the United States that has a lack of electricity. Your location does have a bearing on your regard to the answers posted, as most of the people here have responded as US residents that are involved in one way or another in the US economy. Possible responses to the current US situation may or may not have any effect on our local issues.

I’m not anti-wealthy. Just anti-capitalism. AIDS is a poor man’s disease because though prices have come down over the years, the poorest can still not afford it. The medicines that they can afford are not being produced by large pharmaceuticals but are cheaply produced imitations by benevolent, philanthropic individuals acting on their own.
My question is can consumer-driven corporatism loosen it’s hold enough to let the poor man join the ranks. Not a redistribution of existing wealth, but the means to be wealthy.

@zenvelo I’m Pakistani.

@quarkquarkquark I’m bowing before the depth of your wisdom

@atlantis

“Not a redistribution of existing wealth, but the means to be wealthy.”

Interesting statement since Capitalism is the only system where an averge person can become wealthy. Socialism creates one class, generally dirt poor. Communism provides opportunity for the political elite. And Anarchy provides opportunity for the strong or brutal. Capitalism is the only system that affords the opportunity to everyone to work hard and gain success. I’m not so iudealistic that I don’t realize that some have a better start then others but being poor is not a guarentee of staying poor.

The top 1% of earners in this country (USA) are constantly changing. So much so that 30% of the names in that bracket are new every year. Despite what many say, the opportunities are as rich today as they ever were.

23 new millionaires

Young Rich

I can’t help but wonder, if you don’t like capitalism, what would you replace it with?

Anarcho-liberalism is my cup of tea.

The archetypes you gave for the economic systems are highly simplified. Anarchy as a political system, does not entail brute strength overpowering everything. Quite the contrary, it is about the self-governing capacity of individuals as a system themselves.

Similarly, socialism and communism did not fail as systems. They failed because they were misused by the governments implementing them.

And yes, theoretically the average person can also become exceedingly wealthy in capitalism but that’s not how it works, does it? The sub-prime crisis, the stimulus, the executive bonuses, that’s where capitalism stands as of today. It is actually no better than the Soviet in it’s heyday.

I wonder what will replace capitalism?

@atlantis

Actually socialism and communism failed as a system because they had to fail. The reason they failed is the very reason that capitalism works. It is human nature to try and better yourself. Socialism and communism try to subdue that trait while capitalism leverages it. That’s why it works.

And it works in practice. The stimulus and the bailouts had nothing to do with capitalism. Capitalism would have let the banks fail. We can argue whether that would be better than what happened but it is not capitalism that bailed them out, it was socialistic management of the economy that did that. And I know personally way to many self made millionaires to accept you theory that it doesn’t work. Your idea that everyone will just play nice if we have anarchy, only works for the Borg Collective. That’s not my cup of tea.

@atlantis and @Jaxk the only way that capitalism can be successful is if it is properly regulated. Otherwise, wealth flows to the top and is drained at the bottom. Virtually all of our depressions and recessions are a result of poor or improper regulation.

Socialism fails for large groups for the reasons stated, most people never learn to share.

@Ron_C

I’m in total agreement. Unbridled capitalism is no better than unbridled anarchy. And well intentioned regulation does not mean good regulation. The road to hell is paved with good intentions. I forget who said that.

I can see the viability of human society inclining towards anarchism as a governing system due to the negative fallout of the rest of the systems of modern society. There has been enough bad regulation for people to know what good regulation is by elimination.

Case in point: Japan after the earthquake.

1. THE CALM
Not a single visual of chest-beating or wild grief. Sorrow itself has been elevated.

2. THE DIGNITY
Disciplined queues for water and groceries. Not a rough word or a crude gesture.

3. THE ABILITY
The incredible architects, for instance. Buildings swayed but didn’t fall.

4. THE GRACE
People bought only what they needed for the present, so everybody could get something.

5. THE ORDER
No looting in shops. No honking and no overtaking on the roads. Just understanding.

6. THE SACRIFICE
Fifty workers stayed back to pump sea water in the N-reactors. How will they ever be repaid?

7. THE TENDERNESS
Restaurants cut prices. An unguarded ATM is left alone. The strong cared for the weak.

8. THE TRAINING
The old and the children, everyone knew exactly what to do. And they did just that.

9. THE MEDIA
They showed magnificent restraint in the bulletins. No silly reporters. Only calm reportage.

10. THE CONSCIENCE
When the power went off in a store, people put things back on the shelves and left quietly.

This is the kind of society that has not evolved as a result of regulation or constraints. It is beyond any concept of government regulation, deeply rooted in their sense of community ethics.

If you believe in hope for humanity, you’re an anarchist.

@atlantis, I beg to differ on the front of the capacity of the average person to become wealthy in a capitalist system. I speak here just of the U.S. I will grant you that coming from certain backgrounds, it’s more difficult, but generally speaking there are low barriers to entry in nearly every field. Entrepreneurship is encouraged and, as you can see from, for example, the Forbes 400, it works. This is an economic meritocracy, but I will also grant you that the rich do hardly their fair share of contribution to society once they’re at the top.

@atlantis What happened in Japan is similar to what happened in the San Francisco Bay Area after the 1989 Loma Prieta earthquake, and in the Indian Ocean basin after the 2005 tsunami. People rally after natural disasters.

Please note that Japan is a culturally homogenous society, with very strict expected norms of behavior. How can you even say This is the kind of society that has not evolved as a result of regulation or constraints. ? They have incredibly strong societal pressures and strict regulations.

But how did you get to hope is equal to anarchy? According to the epistle from Paul “now abideth faith, hope and love”. Your statement on anarchy makes no sense.

The US economy will not be “fixed” by government trying to “fix” it. It’s the attempt to “fix” things that has gotten us into the fix we’re in. The economy really works quite well, the less we attempt to “fix” it.

@CWOTUS the economy was fixed once in the Roosevelt era. Our congress and former presidents saw fit to rescind those regulations and the banks went back to their old pre-depression ways. The only mistake the government made was taking banks at their word and assuming that they wouldn’t do things that would be harmful to themselves.

Rather than worry about the government role, we would be better served to severely punish the bankers responsible, Instead we gave them a trillion dollars.

Now the people responsible for this depression and wars don’t want to pay the bill for their mistake. Somehow they dumped the blame on Obama whose biggest mistake was in thinking that he was dealing with people that had honor instead of a bunch of scam artists.

@Ron_C

Right. Twelve years of panic and hyper-regulation and five of total war and “just like that” it was all fixed.

You seem to think that “the people responsible for this depression” are not the politicians making the rules that we play by. And they are certainly the ones running allowing presidents to wage undeclared wars (as usual nowadays). I agree that Obama didn’t cause the initial “bust” that he’s been trying to “fix”, but he and his advisers don’t have the intelligence (or awareness of history) to know that if they stop trying to “fix” things the economy will right itself. The proposed cures are worse than the disease.

@CWOTUS, it is far from certain that the economy will right itself. This, as I’m sure you know, is the prime point of contention between economic theorists on the right and left in the current political climate. As you know, market forces up until 2008 didn’t do awfully well keeping us out of the hole, and it’s worth noting that even conservative economists acknowledge that without the stimulus the U.S. would be in an even worse position than it is now. What is your vision of a recovery without government intervention?

@CWOTUS you are right about many of the politicians that are working on today’s budget are the same ones (partially) responsible for the crash. The irony is that the conservatives want more of the same, “trickle down economics” and less regulations. Trickle down, does not work, we’ve had almost 40 years to prove that. It is not the number of regulations that protect use from run-away capitalism, it’s the quality. Congress has been successful in striping away meaningful regulations in finance and tax law while keeping the most egregious tax breaks and regulations. Further they are still making sure that the regulating agencies are understaffed and under paid.

There is no certainty that the economy will right itself especially if banks and large corporations continue business as usual. In fact, it is almost a certainty that we will have a full blown depression if they do. I am certainly disappointed in Obama because he still thinks that he can get a compromise with people whose only goal is to destroy him without regard to the country.

What are the Republican’s plans to improve the job situation? So far, everything they have done decreased investor confidence and reduces jobs, especially in education where we need more and better teachers and professors, not just worn out dredges that kept their job by seniority, not ability.

They have also vetoed construction projects, curtailed community programs that pay for additional fire and police, cut programs that develop alternative energy, and even cut the space program. Screw them all, I want real progressives, not professional politicians and war mongers.

How come China isn’t bailing you guys out like it’s bailing out Europe?
Shouldn’t the government be going postal over exporting to China?

@atlantis we opened up the Iraq oil fields to China. That is what we are now, just paid enforcers for intetnational cartels. I expect China owns a considerable part of this country already and they don’t want to send good money after bad.

@Ron_C But China says that they don’t want to because of the anti-China sentiment raging through Congress right now. Compared to which Europe’s debt bailout would be a ride in the park for them.
Atleast they’re trying to like China.

@atlantis I go to China quite often and really like the people. They don’t spend time worrying about the U.S., they are trying to build a country. The also want to keep their money safe and invested well. For a long time, the U.S. was the most stable, safe place to store their accounts. Now with the Republican war against America, this country is well on to its way to being a third world country and I wouldn’t be surprised if the Chinese chose to store their accounts elsewhere. Brazil seems like a good choice. The Republican party doesn’t like China, in fact, they aren’t too crazy about anyone that is a little “off color”. The only thing they seem to do well is attack brown people, science, and progressives.