Source: Chicago Fed

Category: Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “Consumption and the Great Recession”

  1. DeDude says:

    The only way to have sustainable consumption growth is to have income growth in the consumer class. When all the wealth created is handed over to the investor class, you strangle the economy. We can temporarily compensate for the lack of strong unions and minimum wage laws, but in the long run you have to have real income growth in the lower 50% to avoid slowly collapsing into a South American economy. There are both practical and political limits to how much you can tax the rich to hand out to the poor. And the creation of easy credit or fake housing bubble wealth may give short-term boasts but also creates long-term drags on consumption. As much as people hate it, we must find a way to get some serious income redistribution from the rich to the poor – even as the market forces are pushing strongly in the wrong direction.

  2. ilsm says:

    The one percent collect the rents received from the empire and are the skimming off the 5% GDP paying for the 20% of federal spending to maintain the militarists’ millstone.

    Divert the 5% of GDP from phony war to useful purpose, collect tariffs and tax the rents.

  3. Frilton Miedman says:

    Dedude, to add to your point, asking the question of what the investor class is doing with that capital is a huge failure.

    While D.C. lobbyists enforce the promotion of any and all tax breaks for the wealthy under the guise of “job creation”, very little research goes into how many jobs are created relative to the revenue’s lost.

    Are these low tax entities engaging in HFT market manipulation, prop trading & cornering commodity futures at the expense of the consumer, opening plants in China & India…or are they really giving the U.S. an ROI that’s proportional to the revenue’s lost?

    According to Simpson-Bowles, the answer is largely NO.

    So much so that the loss in revenues equate to $1 Trillion per year

  4. bear_in_mind says:

    Overall, seems to be a well-researched and analyzed report. It’s lacking in some analytical areas, namely the gross income disparities between the 1 percent and the other quintiles, and the analysis of Fig. 13 looking at inflation expectations vs. measured inflation. I realize these two quibbles are beyond the scope of the paper, so I’m keeping an eye peeled to see if others might take this report and incorporate it into further review. The issue of inflation measure could well be a signal of how much the government is re-jiggering the CPI, while the population is facing a real-world environment where citizens cannot “substitute” goods and services in the manner government statisticians envision.

    As for revenues, it’s mind-boggling to me that THEORIES of ideologues such as Arthur Laffer and John Taylor have not been resoundingly disproved by real-world data. Heaven knows, we’ve spent over 30 years embracing laissez-faire and trickle-down policies. How much longer do we need their implementation before we can arrive at an objective conclusion about their impact and success? As Reagan famously quipped, “Are you better off now than you were four years ago (then)?” If you’re in the 1 percent, the answer is an emphatic “YES!” If you’re in any other strata in society, the answer is no.

    Why the moderates, independents and progressives haven’t been able to effectively distill and communicate this message to the masses is a mystery. I know, I know, they supposedly need money from the 1 percent to stay in office, but is that all there is to it? Or is it a matter of being too high-falutin’ with their rhetoric? Regardless of cause, this fecklessness is leading to our own destruction.

    Finally, it makes no sense whatsoever that Mitt Romney is paying 14 percent nominal taxes (from whatever income means) while persons earning $275K (or $55K) are paying 25-28 percent. It’s regressive and has semblance of fairness only to individuals who think greed and money-grubbing is the highest form of ethics, morality and social good.

    We can again look to history, not to mention other developed Western societies, to inform on how much of a tax revenue burden a society can bear while being sound and productive. The data is indisputable: the United States can not only survive, but thrive with much higher, and much more progressive nominal tax rates. All the fear-mongering by the elites is nothing but crying “wolf.” It’s high time America got back to a revenue formula that works fiscally as well as societally.

  5. gman says:

    5% of GDP to the military is a bit light. Large sums of military spending are also tucked into other parts of the budget than just “defense”..some are officially “off budget” as well.

    The US spends as much on the military as the rest of the world combined…fear the “Iranian menace”

  6. “The US spends as much on the military as the rest of the world combined…”

    peep luv that, supposed, ‘Factoid’..

    Since when? does Spending = ___________ (anything)

    It’s like some Dude that ‘Joins the Gym’ (you know, the one that ‘rated’ “highest” on Yelp!), at an exorbitant Cost, but never goes..

    Sure, He gets to tell ‘the Dr.’ a nice tale, but, is that going to change what ‘the Dr.’ tells him?