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Emily Utter
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I think this is a very interesting article. In this era, more people spend more time mindlessly wandering the internet than doing anything else. And the best part about it is that even though were spending a lot of our time there, we don't have to pay for it. If we were to measure the amount of time spent on the internet in dollar form, it would be hundreds of billions of dollars that will never be collected by anyone. Not only are we not collecting this revenue, free apps and products are replacing technology that we used to pay for. An example the article gives is free apps like google maps and map quests are replacing GPS purchases. There are other examples as well, but all point to the fact that people are paying less than they did a few years back. So not only are we not collecting a large sum of money, the economy is also receiving less money from technology purchases than the use too. This is very bad for our economy, especially when we are in a recession. People don't want to have to spend their money aimlessly, and the internet provides them with a way to get almost anything for free.
Toggle Commented Nov 20, 2013 on Link from Twitter at Jolly Green General
This article discusses an issue that we are focusing on in the class: what happens when lowering the interest rates to as low as they can go doesn't cause any change? Other than this question the rest of the article is all review of what we have learned in class already. It starts off by explaining the Feds reasoning for lowering interest rates, how it occurs, and what it is supposed to do. It then goes into what happens when this doesn't work as the Feds want it to. And the answer is that it just has to keep doing what it is already doing; buying reserves. As the article states: This will hopefully continue to pursue "quantitative easing" once "price easing" hits the lower bound.
Like the author of this article, I believe we need to change the way we calculate investment ventures for the federal government. People get nervous when the deficit goes up, and therefore American people just see the price tag of big investments, not the long run benefits. Therefore when investments are seen as savings, like the average American household sees them as, American people will be more enthusiastic about them. Therefore, with the American people on board, bigger projects will occur causing more jobs and income. Which will lead to a major improvement in our economy.
Something we have talked about in class is how the marginal propensity to consume is much greater for the poor than for the middle class. This article shows proof of this. The average percentage of income that will be used to consume is around 48%, according to this article. While the poor's percentage is much higher at 65%. This causes policy makers to focus their attention on increasing the poor's disposable income because it will have the greatest effect on the economy. This is proven by the fact that when money is transferred to the lowest 10%, aggregate consumption increases by 0.08% while it only increases by 0.05% when the transferred money is targeted at the lower-middle class. This is very interesting and further explains the concepts we have talked about in class. But a warning about this article is that the economist only take into account a change in income and neglects the affects of a possible increase in tax or prices.
The idea of increasing inflation, is to get people to increase their spending, and to decrease their debt. I think increasing peoples spending has always been the governments and economics idea for fixing this recession. But in the past, no other initiatives have worked. So, I'm wondering if increasing inflation will even make people think about spending more. I think people are still scared, and are still resistant to spending more than they absolutely need to, which is what our economy needs to get back to where it was in 2007. Also, like Katie said, this article only focuses on the benefits of inflation, and does not go in depth about the negatives. The only negative even talked about is how over-spending might cause the economy to deflate. Which is the complete opposite view that other economists, like Paul Krugman, have. Increasing the inflation rate is very complex, and this article only grazes the surface of it.
I believe this article shows how unfairly the Labor Department judges what is unemployment and who is unemployed. People who are quitting the labor force, whether it be for unfair demands by their boss or poor hourly wages, are not considered unemployed even though at the moment they are unemployed. There are many other things the Labor Department does to cut people out of the unemployed group and to then make their numbers seem lower than they actually are. Therefore when just given the numbers the Labor Department puts out, one cannot exactly tell if the unemployment went down due to job creation and better jobs, or if people stopped looking for jobs out a frustration (another way the Labor Department cuts down unemployment). Therefore from this article I don't think I can positively say whether or not unemployment going down is good or bad.
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Oct 24, 2013