Comments on: A topological mapping of explanations and policy solutions to our weak economy http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: donna cerca uomo Roma http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/comment-page-1/#comment-54707 Sun, 12 Oct 2014 21:11:47 +0000 http://blogs.reuters.com/felix-salmon/?p=10096#comment-54707 I found your blog web site on google and verify just a few of your early posts. Continue to keep up the very good operate. I just additional up your RSS feed to my MSN News Reader. Looking for forward to reading more from you afterward!

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By: fut 15 coins http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/comment-page-1/#comment-52735 Fri, 26 Sep 2014 01:04:41 +0000 http://blogs.reuters.com/felix-salmon/?p=10096#comment-52735 I’ve been surfing online greater than three hours these days, but I never found any fascinating article like yours. It’s pretty worth sufficient for me. Personally, if all site owners and bloggers made excellent content material as you probably did, the net can be a lot more useful than ever before.

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By: Curmudgeon http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/comment-page-1/#comment-31163 Thu, 22 Sep 2011 13:34:10 +0000 http://blogs.reuters.com/felix-salmon/?p=10096#comment-31163 The world is flat. I know that Friedman’s concept is simplistic, overused, and dated, but I am intrigued by the notion that the education and industrialization of the developing economies are leveling the production playing field, lowering barriers to entry for just about any productive or intellectual endeavor, and evening out wealth across much of the world. Some of this may be refected in your long term unemployed category, but I think it’s broader than that.

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By: MyLord http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/comment-page-1/#comment-31153 Thu, 22 Sep 2011 01:17:00 +0000 http://blogs.reuters.com/felix-salmon/?p=10096#comment-31153 Legalizing the money drop has to be looked at seriously to accommodate the debt liquidation that is occurring rather than attempting to reverse it. The loss in wealth must be made up and a money drop is the fastest, surest, route. Interfluidity and Modern Monetary Theorists talk about these.

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By: Doly http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/comment-page-1/#comment-31152 Thu, 22 Sep 2011 00:06:13 +0000 http://blogs.reuters.com/felix-salmon/?p=10096#comment-31152 I’m missing something in your graphs: some people (see Econbrowser blog) suggest that high/volatile oil prices have had a significant effect on weakening the economy so much.

I don’t know how you want to call this, but I have seen the following idea floated in the blogosphere: the problems we are having now are in several ways similar to the ones in the oil crisis in the seventies, with the difference that monetary policy has avoided inflation. In the seventies, credit was expensive and job security was relatively high, so the extra expense due to high oil prices was passed into the prices of products and services, creating inflation and a wage-price spiral. In this crisis, credit was very cheap and job security was low, so the extra expense due to high oil prices was converted into extra debt, and when this failed, wages were cut.

There’s an argument that says that the origin of the current problems can be traced to the huge oil imports of the States. A lot of the trade deficit of the States is oil. And many currencies are, or were until recently pegged to the dollar, which creates a situation very similar for the States as if there was a gold standard. There is, de facto, something similar to a dollar standard. A trade deficit with a gold standard is recessionary, but Greenspan avoided that recession by lowering interest rates and creating the housing bubble as a result. (Some people say that there wasn’t enough money in the dot-com bubble to have caused the recession that was blamed on the dot-com bubble).

For people that believe that peak oil is here, there isn’t an easy solution to that problem, because high/volatile oil prices will continue to throw sand on the wheels of the economy. I’ve seen suggestions for infrastructure spending that will reduce the cost or need of transport, and calls for localisation (the opposite of globalisation). None of those things are likely to produce results quickly, though. And with the huge wage difference between the States and China, localisation doesn’t look like it would work well for many products.

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By: marantz http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/comment-page-1/#comment-31148 Wed, 21 Sep 2011 20:37:10 +0000 http://blogs.reuters.com/felix-salmon/?p=10096#comment-31148 I’m convinced that politics will not allow a tax increase until January 2013. So what are we left with? Government needs to back off, as it is creating more uncertainty that is encouraging this “hoarding”.

These policies have create the unintended consequence of uncontrolled positive and negative feedback loops, and even mundane policies are having this perverse effect creating outsized winners and losers. The biggest loser is main street.

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By: Kosta0101 http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/comment-page-1/#comment-31147 Wed, 21 Sep 2011 20:25:16 +0000 http://blogs.reuters.com/felix-salmon/?p=10096#comment-31147 Great project and a great start in aggregating ideas. A small comment about the placement of the higher inflation target dot. One of major effects of higher inflation is that it inflates away the real value of debt. Thus, an increase of inflation at this time would be to reduce the debt overhang.

Also, higher inflation, if it bleeds into housing prices, will increase the nominal value of houses especially with respect to the underlying debt. A higher inflation target could also reinvigorate the housing market.

As such, the dot locating higher inflation target should be moved to the right such that it is closer to, or within, the Housing Policy and Debt Hangover circle.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/09/21/a-topological-mapping-of-explanations-and-policy-solutions-to-our-weak-economy/comment-page-1/#comment-31146 Wed, 21 Sep 2011 19:15:09 +0000 http://blogs.reuters.com/felix-salmon/?p=10096#comment-31146 The main cause for the weak economy is the hoarding of profits. An economy can only be sustained when a percentage of profits are re-used and recycled, and that’s not happening. Every asset needs to be maintained, or else it loses value; a national economy (a financial system, a monetary system, transportation, communications, education, health care, food distribution, etc.) is a national asset, and if enough of the profits it generates are not cycled back into the economy, it will stagnate or die.

Cutting taxes has not proved to be a driver of investment, nor has low interest rates, mainly because people and businesses only invest when they think they will make money. Low tax rates or low cost capital is irrelevant if you don’t think the investment will pay off, and that’s where we are at today. We have cut taxes with the hope (or prayer) that the beneficiaries of tax cuts will voluntarily risk their tax savings on new ventures, and surprise, it isn’t happening.

We need to change our tax policy from one that simply hopes for investment to one that rewards investment. Low effective tax rates should be effective only AFTER an investment has been made, and the best way to insure this happens is higher tax rates combined with significant tax credits for investment. There has to be a feedback path from profit to investment, and it can’t just be wishful thinking. To make it more likely, we need to let investment drive tax rates, not the other way around.

This is allegedly a market driven economy, which means demand drives supply, not vice versa. Increasing the supply of money only enables demand, it does not cause it to happen. Since the debt criss occurred, demand has not recovered, as people are either not confident they can maintain their income, or they don’t have enough income to increase spending. If the small segment of society that has been accumulating profits is given the choice of paying more taxes or re-investing those profits, they will most likely choose the latter. And the net result will be more jobs, and ultimately, more profits. Cutting tax rates without conditions will result in less growth, as those profits will just gather dust (not even interest these days), when they are not being distributed as bonuses.

Or was this in there somewhere?

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