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This is a ridiculous notion that further shows there is no understanding of the monetary system at the highest levels, or the ‘debt’ per se would not be a concern. They obviously don’t understand taxes function to regulate aggregate demand (spending) and not to raise revenue per se.
Reminds me of a story Phil Harvey used to tell about sending 100 dogs into a room with 95 bones in it.
5 dogs don’t get bones.
The sociologists and micro economists examine them, and find that the 5 least intelligent, least aggressive etc. dogs didn’t get bones.
So they train those 5 dogs and repeat the experiment, and this time those dogs do get bones.
Of course, 5 others don’t, because the bone shortage is a macro problem.
Same with unemployment.
The problem is a lack of funding for paid jobs because people would rather save their incomes than spend them on goods and services that require labor to produce.
Short of trying to figure out how to get the population to spend by going deeper into debt (reduce savings) which is about as impossible as it is undesirable, the only solution is to cut taxes or increase govt. spending to provide the needed funding.
If this misunderstanding continues, look for high unemployment, a deflationary backdrop, and the Fed on hold until something changes to reduce the output gap.
By Kate Andersen Brower
Nov. 2 (Bloomberg) — President Barack Obama said the U.S. economy has pulled â€œback from the brinkâ€ and the government must now â€œget seriousâ€ about reducing debt and helping spur job growth.
Addressing a panel of business and labor leaders and economists, the president said it will require â€œbold, innovative actionâ€ on the part of the government and private industry to bring the unemployment rate down and lay the foundation for future growth.
â€œWe just are not where we need to be yet,â€ Obama told his Economic Recovery Advisory Board, headed by former Federal Reserve Chairman Paul Volcker. Along with helping spur job growth, â€œThe government is going to have to get serious about reducing our debt levels.â€
This was the second time the full board has met to brief the president on ways to create jobs and encourage economic growth. Obama formed the advisory panel in February to provide an â€œindependent voice on economic issues.â€ Todayâ€™s meeting is focusing on creating jobs through innovation.
Along with Volcker, board members include former Securities and Exchange Commission Chairman William Donaldson; Robert Wolf, chairman and chief executive officer of UBS Americas; Penny Pritzker, who led Obamaâ€™s campaign fundraising effort and is chairman of Pritzker Realty Group; Jeffrey Immelt the chief executive of General Electric Co.; Caterpillar Inc. Chief Executive OfficerJim Owens; and AFL-CIO President Richard Trumka.