Thursday, March 4, 2010
A bit of re-stocking, a bit of number-fiddling
Reagan's Assistant Sec. of the US Treasury argues that the 5.9% GDP growth in Q4 2009 is due largely to inventory accumulation and the rest is due to statistical games. As with the UK, the expansion of monetary base hasn't fanned out into broad money expansion. Lack of consumers' income growth led to private indebtedness, but that driver of economic growth has now gone. Add in the export of good jobs and you wonder where the basis for recovery is. He says fiscal tightening is deemed necessary since US debt can't be financed indefinitely by foreigners' trade surpluses, and monetisation at this point threatens the $ reserve status - but why do bankers and the military get the government largesse while health and social security bear the brunt of calls for government cuts?