GOP still digging in…
🚨MCCONNELL: "Let me make something perfectly clear. if [Democrats] dont need or want our input they wont get our help … with the debt limit increase that these reckless plans will require."
— Jake Sherman (@JakeSherman) August 5, 2021
All we need is some dramatic battle music.
ReplyDeleteIn normal times.
ReplyDeleteConsumption spending is normally very stable. People have contract payments like cars and mortgages, rent and consumption habits every month maybe take a yearly holiday. With what is left over our choices are quite limited and we save a portion of that. That is even more so the poorer you are.
Imports and exports are pretty stable also and don't have that much volatility.
There is not normally massive changes in government discretionary spending they are already programmed in. During economic expansion government spending automatically falls with taxes increasing.
Which leaves investment as the most volatile component of GDP. How much firms spend to expand capacity and tracks with the business cycle. At the start of the cycle after drop of demand and stock markets fall. When profits do start showing up again businesses are surprised and the investment starts up again and commodities get bid up again after falling and then they know consumer demand is limited so when they think they have expanded and built enough investment starts slowing down again. Profits start falling which ain't bad profits but didn't hit projections and then the automatic stabilisers built into the system that speed up the end of the cycle and commodities continue to fall.
How good an indicator is Real Gross Private Domestic Investment to let you know the bottom has been reached and the top ?
Obviously you would look at other things like commodity prices and if government spending has slowed because of the expansion and watch bank lending and household debt in case bank lending was being used in the same way it was under Clinton.The
But is Real Gross Private Domestic Investment a good all rounder and if you had to make a top 3 of things you Look at to try and look at how an economy is doing. Would it be in your top 3 or just make it into your top 5 or not at all and you wouldn't use it ?
When you look at the SP500 and Dow Jones graph from 2010 right up to today that just isn't normal right ?
ReplyDeleteIt just looks scary and how much of that growth is based on fundamentals ?
Compared with what the FED has being doing since 2008 and caused by asset price inflation ?
Corporate profits have only grown between 2016 to 2020. During that whole stock market boom. 4 years to create graphs like that.
We are living in a fantasy world man. MMT needs to include a chapter on asset price inflation.
If you invested in the stock market in 1900 up to the year 2010. A 110 years across the whole industrial revolution.
ReplyDeleteYou would have made less money that somebody who had only started investing in the stock market in 2016. 5 years.
Crazy man.... Absolute bonkers.