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Mon Feb 11, 2013, 01:21 PM

Yep. We have a spending problem. We're not spending enough.

Janet Yellen Vice-Chair of the San Francisco Federal Reserve has a big new speech out about how slow this recovery has been, and why.

One of the culprits for the slower recovery?

Fiscal policy.

Specifically? Were not spending enough.

Government spending, which usually provides a boost to the economy in the quarters following the recession, has been a net drag this time because the government is spending less than it normally does.

As this chart shows, in the initial 4 quarters since the start of ths recovery, government spending provided its standard boost to GDP.

But in the 8 quarter and 12 quarter period after that, fiscal policy has been a drag, as spending growth has been a lot slower than in past recoveries.

So yes, spending is the problem. We just need to crank it up.




Read more: http://www.businessinsider.com/janet-yellen-chart-shows-how-fiscal-policy-has-been-a-huge-drag-2013-2#ixzz2KcFxBquE

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Reply Yep. We have a spending problem. We're not spending enough. (Original post)
JaneyVee Feb 2013 OP
earthside Feb 2013 #1

Response to JaneyVee (Original post)

Mon Feb 11, 2013, 01:35 PM

1. We're spending enough.

We're just spending it in the wrong places.

I think debt does matter.

However, spending a trillion dollars a year on the military and military/security related programs is way too much money down a rathole.

Because of overpopulation and resource depletion, we are not ever going to have the kind of 'growth' economy that the era of cheap fossil fuels provided for us over the last one hundred years ... so debt is going to matter even more in the future since we cannot 'grow' our way out of even the debt we have now.

And the working and middle class certainly is not in a position to pay anymore fees and taxes; inflation is a real concern for the 80 percent-plus of Americans who aren't seeing any raises in pay. Debt induced inflation would be catastrophic for us.

So, we need to rearrange our federal government spending priorities -- a woman working to build a highway in Ohio will give us a greater multiplier than a twenty year old getting paid to stand guard at some military base in Bulgaria.

Sadly, both major political parties in this country are pretty much wedded to the old fashion notions of growth. If we don't see the sequester, we will undoubtedly see only a slowing of the usual upward appropriations for the military and probably a slow but certain decay in the safety-net programs.

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