Economics 101 In 3 minutes

A deficit is good during a recession. Bush 2 is spending more than he has; this creates jobs and generally stimulates the economy. Similarly, the Fed lowers interest rates so there is more money to stimulate the slow economy. This is standard stuff for the public but it doesn't really work because only a engineer/businessman can create a real job. Gov't can only create make- work jobs that ultimately must disappear.

For example the Fed, with low interest rates, gives away a lot of money to the real estate industry so they look very busy building houses, etc., but the Fed would have to keep doing it forever or the jobs will disappear. But they can't do it forever because giving away money in the end just produces inflation which really means that those not in the housing industry have to pay exactly the amount in inflated dollars that the Fed unfairly gave to the housing industry.


A real job occurs when one businessman finally gives up and decides he has to fire one worker because the goods that worker makes aren't needed in the market place. Finally consumers spend money that would have been spent on the old workers products somewhere else, another businessman notices the new demand for his product and so then has new money with which to hire a new worker to meet the new demand. But even this is not an addition to employment since the loss of one job created the gain of another job for a net of 0. With the same amount of money in the system it is impossible to have a new job without losing an old one in order to free up the money for the new salary.

So how do you really add to employment? Engineers do this by improving products. A farmer, for example, might grow more grain with less money, time, land, equipment and supplies. This means he has the same money coming in from his grain sales but more profit at the end of the year. Now he can afford two cars every three years, lets say, which means real sustainable new jobs in the automobile industry which are filled by those who no longer have jobs in farming. But again where is the net gain in new jobs? After all there is not a law which says that a new harvester that takes the jobs of a thousand manual laborers must lead to new jobs for the 1000 displaced workers. In reality it does happen though because unemployed workers will accept jobs at the harvester plant or elsewhere at some wage, even if it is a lower wage, unless the gov't interferes with welfare, unemployment compensation or some other unemployment program.

So the real question then is not how many news jobs are there (there are none) but how do you create a better standard of living , or, why has the standard of living gone up so much for everyone in a dynamic capitalist economy? Again engineers are 100% responsible. The more efficient farmer has more money to buy more products in new industries which creates jobs(though not new jobs in any meaningful sense), employs more people to expand his existing farm, or lowers his price to enrich his customers who in turn can then hire more and buy more. But no one takes the first step or any other step in capitalism unless it improves his standard of living which it always does. At the heart of this process is the engineer, or the businessman who employes him. They get the ball rolling by making a better product that sets off a chain of events that gives everyone a higher standard of living. Democrats have nothing whatsoever to do with the process.

One thing is very certain though : while Democrats can't create one single jobs by fiddling from Washington they can destroy jobs very easily from Washington, which their philosophy automatically does. What they can do is muck up the system and then try to take credit for the fake job creation that takes place as they pull out some of the monkey wrenches that they themselves threw in?
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I guess the other way to look at the economic cycles is that every time a supply sider got in, the economy went into the toilet because it really doesn't work.
********a supply sider is a guy who believes in letting a farmer supply more grain without inteference from the Democrats. Supply side economics or capitalism works perfectly.

I sure don't understand this deficit stuff anyway.
*******now you do
I kind of think it is like a big charge card, where you don't bother paying anything back because you can keep raising your limit and making new charges.

*******the real mystery is when will it create a huge inflation? After all they borrow and borrow to throw all this fake money into the system to artificially stimulate the economy so Bush can win, but sooner or later prices should start going up to absorb all the new money? Whatever happens, the deficit will have to be paid off with interest, which begs the question: did we need it in the first place?

But I have to admit, it all sounds like voo-doo economics to me.

*******the simple solution is to let capitalism reign.
Ted/KJK1