More state intervention is required to pull the US economy out of recession, says central Bank Chairman Ben Bernanke. His complaint is that the economy is growing “less vigorous than we would like”. His said his primary concern was addressing deflation and high unemployment.
“Nonconventional policies have costs and limitations that must be taken into account in judging whether and how aggressively they should be used.”
One measure that he is recommending is to increase the money supply by giving money to financial institutions; hopefully this will encourage them to loan money and increase asset liquidity.
“In simpler terms, that would mean the Fed buying up financial assets, such as government and corporate bonds, by using funds the bank has created out of thin air.”
According to Aljazeera, The US treasury, meanwhile, has reported that this year’s budget deficit narrowed to $1.294 trillion from last year’s record $1.416 trillion.
Although officials on Friday called it the biggest deficit-to-GDP improvement in 23 years, the budget gap remains the second-highest in US history.
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Clearly state intervention is required to keep the economy from crashing further. The ideas of neoliberal economics have been proven a complete flop. The removal of restrictions and regulations has crash the economy just as it did before state regulation over the economy. As usual, planning and common sense is necessary to repair the damage caused by the free market.
The drive to create jobs is the only thing that can pull the economy out of recession. However this form the push of jobs is taking will not have the desired effects. Just simply lending out money for business to start will not create the required jobs. Full time, regular, well paying, manufacturing work is what is needed. These jobs are the only ones that can create value to balance out the now excessive fictional values created by the financial industry.
Unfortunately the capitalist system does not intend to do this. When manufacturing jobs are to be created, they are created in the Third World to cut costs and increase profitability. They are not made here out of shear greed. This economy, our economy needs these full time, well paying, manufacturing jobs. The only thing we will be receiving is service jobs that create no value and increase inflation.
Since you can’t force a company to create jobs in the first world, because that would go against the profit motive because its more expensive. It will be necessary to force job creation domestically. The most efficient way to do so is to create state enterprises that offer full-time work with benefits and a decent wage so that employees can purchase commodities and buy homes realizing those fictional values. The capitalist system is not going to get this done; it’s high time for a real change to a socialist system.