Take a look at this chart.
It doesn't take long to notice that the numbers for 2009 are almost identical to the numbers for 2007. So '09 was a pretty awful year.
Now look at 3Q10 (which will be revised, but hey...) comparing to 2007. All the numbers are more or less equal to 2007 until you get to proprietorship incomes which are up, both farm and non-farm. So that category is OK.
But the biggest pop? "Personal transfer receipts" (unemployment, SocSec, etc.)
That ginormous increase from transfer-payments is almost equal to the increase shown in the very last line (disposable income, chained).
Ticker also notes that tax revs are down significantly, so while the Gummint pays out a lot more in transfer payments, it's taking in a lot less in taxes. About a $920 BILLION spread.
Ugh.
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Transfer payments remain extremely high and tax receipts continue to be seriously depressed.
In other words, mass unemployment continues to be the single biggest contibutor to our deficit woes. Unless we boost AD and therefor GDP, the only resolution to our long term debt problem is default.
This story has not changed since the fall of 2008.
Yah, well, AD depends on two factors: having spare money AND being willing to spend it.
Spare money's easy; ask Helicopter Ben. Banks have it in spades.
But it's damn difficult to force people to spend it (see, e.g., the personal-savings rates until 2010.)
"But it's damn difficult to force people to spend it"
And that's why government should print it AND spend it until "people" deleverage enough to begin boosting consumption once again.
Oh and a bit of inflation would help get some of that money moving again as well.
Yah, maybe they'll spend. And maybe not.
There's plenty of inflation coming next year. Commodities are spiking, and the recent prices-paid number in industry/commerce shows ~3% increase, the greater part of which is food/fuel.
Every move to increase the Federal debt makes me hunker down more.
More print/spend will not help.
Jobs in the private sector and economic growth will be the only thing that helps.
"Jobs in the private sector and economic growth will be the only thing that helps."
And, yet again, this is a false assertion. In a liquidity trap, public money spends the same as private money and G is a component of GDP so it adds/subtracts to growth. Folks can be upset about public debt, but anecdotal arguments can't change a basic math equation I'm afraid.
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