Friday, May 22, 2015

This is exactly the problem with our government

“Think about it. I’ve spent the last six and half years yanking this economy out of the worst recession since the great depression."

~Barack Obama

Wow. I can't believe he actually said that. It's amazing and quite revealing.

Some thoughts:

I bet his back and hammies are KILLING him!

The economy actually came out of recession in June of 2009, so I'm not sure exactly what BHO has been yanking on the last 5 years.

Seriously, how to read this? One way is to say that fiscal policy and regulation control the economy and BHO has done a terrible job of yanking (or blame it on some other incompetent yankers like the damn Republicans). Another is to say that fiscal policy and regulation has very little to do with cyclic swings in the economy and BHO has been yanking in vain for 6.5 years!

I lean toward the latter view.


Thomas W said...

It's all in how you define the words. For President Obama (and many people), the recession is not defined by economists saying when the economy quit shrinking, it's when we're back to the pre-crisis bubble level of prosperity. There's some truth to this -- by strict economic definition one could say the Great Depression ended somewhere around 1933 when modest growth returned (don't quote me on this, I'm going from memory and am too lazy to look it up right now).

I see the same in some advocates of a higher minimum wage, guaranteed income, etc. They argue that their policy will result in an adjustment (increase) in prices, but this will be a one time increase, so it isn't inflation (which is constant a increase in prices). So far I've yet to get anybody with this position to explain to me how to distinguish one time price adjustments from inflation when looking at changes in the consumer price index (or whatever measure they pick).

Max said...

Like Thomas I think this is the problem of economists communicating on depressions or the economy in general. There is a language difference between us amateurs and the economic profession. We don't care much about GDP rises when it is not reflected in the labor force and participation statistics.
You can generate GDP and still only a certain group of people will make money and gain from it.

I still believe that was true at the end of the recession 2009. Don't know about now but labor participation rates are not convincing me entirely that we are out of the recession.
However, I keep a closer look on the EU rather than the US because that's where I live.

William said...

Actually the economy has not been yanked out of the worst recession since the great depression, it has been pushed. It has been pushed by the tidal waves acronyms invented by the fed used to describe various forms of printing of money, all of which is just another form of trickle down economics which has created a bubble in financial markets.