EconomicCrisis.US

Right now, we are in the middle of deflation. The Global Depression we are experiencing has squeezed both aggregate demand levels and aggregate asset prices as never before. Since the credit crunch of September 2008, the U.S. and world economies have been slowly circling the deflationary drain.

To counter this, the U.S. government has been running massive deficits, as it seeks to prop up aggregate demand levels by way of fiscal “stimulus” spending—the classic Keynesian move, the same old prescription since donkey’s ears.
Read the rest of this entry »

Bigger, as the Federal Reserve may soon discover, is not always better.

The prospect of a renewed effort by the U.S. central bank to drive down already super-low borrowing costs raises the issue of whether such measures can help stimulate a recovery that is faltering due to a lack of consumer demand.

The sorry state of the U.S. economy, despite all the monetary and fiscal firepower the Fed and the Treasury have deployed, already befuddles the experts. Worries about a double-dip recession are rampant, and were the topic du jour at the Fed’s annual Jackson Hole conference.
Read the rest of this entry »

‘This sucker’s going down” was George W Bush’s pithy description of the United States’ economy when the financial crisis of late 2008 threatened to bring down every bank on Wall Street.

Disaster was averted by concerted international cooperation of a sort never seen before and, by the middle of last year, the world’s biggest economy seemed to be on the mend. Factories started to hum again, shares rallied sharply and growth resumed.

The US seemed to be showing its traditional resilience. That judgment now appears premature. The latest US economic data has been poor. Traditionally, the US’s flexible labour market has meant job creation after recession has been robust. This time it was weak even when output was growing strongly in late 2009 and 2010. Recently, it went into reverse.
Read the rest of this entry »

Federal Reserve Bank of Chicago President Charles Evans said Tuesday the economic recovery is “extremely modest” but he believes it’s unlikely the economy will fall into a double-dip recession.

The pace of recovery from the worst economic meltdown since the Great Depression is “slower than we had hoped for,” said Evans. He acknowledged that although the risk of a double dip is higher than it was six months ago, it is “not the most likely outcome.”

Recent economic figures point to a faltering economy, including surprisingly weak housing data, released after Evans’ remarks Tuesday to the Indianapolis Neighborhood Housing Partnership.
Read the rest of this entry »