I would suggest you use simple logic or common sense but that is clearly not your strong suit.Laz, I know what you mean about the common sense approach to budgetary concerns but, the kitchen table accounting that we do everyday to balance our checkbooks does not translate to the worlds largest and most wealthy economy that has worldwide implications. You can't tackle the debt for 340 million people whose livelihood depends on even the slightest change in policy like austerity measures for instance, like you do at home.
Large deficits will lead to higher taxes because debt has to be paid back. The only way to do that is cut spending, so that the current tax revenue is redirected to paying debt instead of providing services, or raise taxes. The politicians have proven to be incapable of having the guts to tell people we are broke and act responsibly so that only leaves one alternative. We could inflate our way out of the debt but that is the same as a tax since it reduces the value of everyones savings.
As for companies not hiring you need to ask yourself what would you do in this economic environment. Would you take the risk of hiring someone without knowing what the impact of Obamacare is going to be, will your demand justify having the employee for a long term. New hires are not inexpensive when you consider training and the time it takes for them to become productive. It is a smarter decision to make do with the employees you have or possibly hire temp employees so that you are not on the hook long term. There are surveys that demonstrate this but it is simple logic.
If this does not satisfy you, to bad because I really don't care. I do not have a strong desire to prove myself correct. If you think my statement is wrong then prove it or ignore it. Originally Posted by Laz
Keynesian economic theory is what President Obama has used successfully to start the economic recovery, the most recognizable of which was the Stimulus package, and here is how it works in a simplistic way:
In a downturned economy, we all stop spending. When we stop spending we cut back visits to the hot women here on ECCIE right? Well, she then cuts back on buying lingerie, then the lingerie company is not making money and they start laying off employees and then those employees don't have money and they cut back and so on and so on. Well this snow ball effect devastates the economy and when you put this downturn into perspective nationwide you can see what happens.
So, Keyensian theory says in the SHORT TERM, the only entity that has the power to turn the economy around and pump life back into it is the Government. So then you extend unemployment, spend money on infrastructure, make sure that no catastrophic losses occur like GM and Chrysler which would tip the scale and basically increase government spending.
This injection of cash jump starts the economy back into forward motion and then once the economy is on a solid path of recovery you begin to address long term debt but not until the economy is going strong. Drastic austerity measures slows recovery or completely stops it as demonstrated by the Greeks and the EU.
Keynesian theory is proven and it works but it could've worked much quicker had the republicans not filibustered every attempt to implement it because they know the president would get credit and win another election.
So far it looks like the worst nightmare has occurred for the republican party because Wall Street broke 13,0000 and that shows massive growth and really excites investors and all at a time right before the election which makes it fresh in the minds of the voters.
