[schu]

We are neither recovering, as the Keynesian model predicts

His theory may well be true, but the reason the Keynesian model is not working is due to Bam’s ineffective policies. The marginal utility of debt is negative, meaning the the economic value created by this debt is less than the cost of the debt, hence we are wasting our money.

IMHO, it really has reached the point where the Government/Fed are not capable of fixing this.

schu

[arthurus]

The government and Fed were never capable of fixing it. The only things that could have been "done" constructively are all negative such as frantically to deregulate the economy and cut government spending absolutely by a solid percentage while reducing tax rates substantially, removing capital gins and corporate taxes altogether. The rebound would have been rapid rapid were that done early. Government experts cannot read price signals that do not affect their business and cannot react in a timely manner to those signals. There are not enough experts to substitute successfully their judgment for the judgment of hundreds of millions of market actors. By the time the experts discern an unfavorable trend and turn the dial to counter it it is way to late and the market is already moving the other way.

It is like a novice with helm experience on bass boats being given the helm of an 800 foot tanker. He sees that it is heading off the set course by 3 degrees and pushes the helm over just a little. The vessel does not seem to respond so he pushes a little more and again no response. He pushes it some more then it starts to come back a bit.When the vessel is again pointing properly he centers the helm. And the tanker keeps turning . The novice pilot gets a little concerned and taps the helm back a little, then a little more until the ship starts to come back again.Repeat. The ship is covering the ocean in gigantic S curves of increasing amplitude. That is what happens to the economy when sincere Keynesians get hold of it. They see some of the signs but cannot actually read any of them. And that is all assuming their political bosses aren't pulling on the helm for political reasons, and they surely will be doing just that.