The Oil Drum

Someone once stated when asked about politics and the prez.
"they don't run this country,Greenspan runs this country"

He needs to hie himself to a nursying home and spread his homilies elsewhere. Again the man is an utter fool. Why has anyone put up with the asshole for all this time?

Indeed, what is it that America does these days?  New industries, such as Google, print ads to sell services and cheap goods.  Are all these services just a sham economy?  Not really producing each other, but feeling like we are because we are getting paid?

According to the Sprott article above: "US money supply, as measured by the most recent reading of the now defunct M3 (may it rest in peace), is up at least 50% so far this decade, and likely even more if it were still being reported."

Since the # of USD has increased 50% since 2000, should not the Dow be up 50% since 2000?

I wish there was a TOD for economics.  It is quite difficult for the layman, such as myself, to figure out what is going on.

Just a few weeks into falling gas prices, new vehicle shoppers have ranked "overall fuel economy" No. 21 among attributes they most care about, two spots behind cup holders...

It would seem to me a more probable explanation than the same middle class crowd changing their opinions so quickly (though that is definitely a factor as well).

this doesn't mean that SS doesn't need fixing, too.

Again, from a bird's-eye view, the Iraq war has resulted in additional government spending that other countries have financed without question.  He isn't saying it won't have some effect in the future, but as long as China, etc. are willing to buy US government debt, there isn't likely to be much effect on the economy directly from the war.  When they stop being willing to buy government debt, interest rates will rise and the dollar will fall, and this will have an effect on the economy, though economists will say it's the overall debt that's the problem more than any particular spending.  It will take some economic historians to piece out the war and its contribution to the economic problems.  

He didn't really say Social Security isn't an issue either.  He said that if it weren't for politics, it would be easy to fix.  You can read this two ways.  If the assembled group were the usual elites, they would spend their 5 useful minutes cutting benefits.  If the assembled group were representative of the population, they would spend their 5 useful minutes soaking the rich.  The politicians try to represent both at once and reach a stalemate.

The manufacturing comment sounds like a BS rationalization to me, but if you believe that the world will eventually accept US services in exchange for foreign manufactured goods, this would make sense.  I think of things like software and medicines as manufactured goods, but economists classify these new technology things as services, so in that context his comment would make sense if we didn't have a tremendous trade imbalance.  

Can anyone tell me why social security isn't an issue?  It would take 15 minutes huh?

Raise the cap on wages subject to the SS tax so that 90% of total wages are subject to the tax, the same fraction that was covered in 1983 when the current cap system was put into place, and require that the cap rise or fall as needed to maintain that coverage. Add a modest means test that affects only those with more than $75K of income (in today's dollars) outside of SS. For forecasts -- since the "issue" is all about forecasts -- use values for the model parameters chosen for reasons of maximum liklihood, rather than the odd set of constraints that the SS administration is required to impose. The forecasts then show the trust fund stabilizing in positive territory. Problem fixed, 15 minutes.

OTOH, this shifts the "issue" to the federal general fund -- which will, first, have to learn to live without the SS surpluses, and second, pay back, with interest, at least a portion of the trillions of dollars of SS surpluses that it has borrowed and spent already.