It has been nearly seven years since the official conclusion of the Great Recession. At this point, it’s clear that the supposed economic recovery hasn’t benefited everyone equally. Some individuals hit rock bottom in early 2009 and have continued to struggle since then.
Recently, it was reported that U.S. credit card debt soared to $714 billion in the third quarter of 2015, an increase of $34 billion from the previous year. Why, during what is touted as an economic recovery, are consumers accumulating more debt instead of paying it down?
Theoretically, an economic rebound should allow consumers to alleviate their debt burdens. Unfortunately, this recovery is merely an illusion driven by low Federal Reserve interest rates and financial maneuvers, rather than authentic economic growth. Consequently, a genuine uplift in collective prosperity hasn’t been achieved.
Those who are not part of the financial sector or other bubble industries, such as government lobbyists, have seen little to no improvement in their incomes or overall living conditions. The well-paying jobs that disappeared during the recession have been replaced by lower-wage service roles. Consequently, many consumers resort to increasing their credit card debt to make ends meet. Continue reading
Central bankers and economists globally frequently lament that fiscal policy is inadequate. They argue that more substantial direct stimulation is necessary, asserting that monetary policy alone is insufficient.
Hardly a week goes by without the monetary policymakers expressing discontent with the fiscal strategy. They contend that government spending lacks the necessary impetus to enhance GDP. They are pushing for increased expenditures and “structural reforms” to boost aggregate demand.
Just a month ago, leading up to the G20 summit, the Organization for Economic Cooperation and Development (OECD) stated that achieving sustainable and inclusive growth necessitates an immediate policy response that incorporates monetary, fiscal, and structural measures working in tandem. The OECD report emphasized, “The case for structural reforms, complemented by demand-supporting policies, remains strong to sustainably elevate productivity and job creation.” Continue reading
“The Phillips Curve is alive,” proclaimed Fed Chair Janet Yellen at Wednesday’s post-FOMC meeting press conference.
We’ll address why this statement could signify troubles ahead for Yellen in a moment, but it’s essential to contextualize her remarks first.
This week, during a business meeting, we encountered firsthand the truth of Brandolini’s Law. For those unfamiliar, we apologize for shattering your blissful ignorance.
Brandolini’s Law, or the BS Asymmetry Principle, proposed by Italian programmer Alberto Brandolini, asserts, “The amount of energy needed to refute BS is an order of magnitude greater than to produce it.”
In simpler terms, it requires significantly more effort to debunk a fallacy than it does to fabricate one. This principle finds countless applications across various contexts. Continue reading
One of the foundational principles of economics is the saying, “There ain’t no such thing as a free lunch.” This undeniable truth emphasizes that everything has a cost associated with it.
For instance, even if someone treats you to lunch, that meal still isn’t free. The opportunity cost, such as your time spent eating instead of engaging in other activities, carries value. Furthermore, even if one does not regard their time as a cost, someone ultimately paid for that lunch; thus, it cannot genuinely be considered free.
Despite this straightforward fact, politicians often promise free benefits to the populace at the expense of a few. This phenomenon is particularly prominent during election seasons, with promises of free education, healthcare, housing, and food.
From free college to subsidized medication, it seems there are hardly any costs that this year’s batch of presidential candidates haven’t claimed they could cover. This approach is inherent to gaining electoral support. It’s the nature of political campaigning in a democracy.
While opinions on this practice may vary, the underlying economic truth remains clear. Continue reading
