Permanent Portfolio Blinders

[moda0306]

Stone,

I guess I wouldn't peg it to military so much as "expected permanence & clout" for lack of a better term.

I won't disagree that adventures like Iraq weaken us overall.

If one expects, between military and economic stability, for the government to be around to collect taxes and enforce legal tender laws, there's little room for that "mass doubt" that has probably affected past governments and lead to hyper inflation among other disastrous outcomes.

[MediumTex]

The idea that the US military somehow conveys value to the USD seems to me very dodgy. Iraq shows just how expensive it is to try and get one country to sell oil for USD. To me the idea that you can bomb foreigners into being willing to save in USD is nonsense. The only thing that really conveys value to the USD is making sure all (or at least most) Americans are prosperous. Throwing all your resources at the military seems to me to do the opposit of that.

The Mafia does this sort of thing profitably all the time--it's called a protection racket.

The U.S. has been providing an international protection racket since the end of World War II, one of the most prosperous periods in the history of the world, and the U.S. has profited handsomely from it.

No protection racket goes on forever, but as long as it lasts it's a nice arrangement for the party with the most muscle.

[MediumTex]

Nevertheless, parabolic trends in all aspects of life tend to end badly in collapse. Our debt has basically gone parabolic.  Will this be the exception?

Human population growth has also gone parabolic in the last 100 years or so.  Do you foresee a mass human die-off in the near future?

Of course all parabolic trends tend to reverse at some point, but when will a given trend reverse?  Will it be tomorrow or 20 years from now?  Who knows?

[doodle]

The ultimate question Moda is how do we get down off of this credit bubble?

Austerity is really the only solution but that is nearly politically impossible and its effects on the economy would devastate tax revenues by killing the economy driving us deeper into debt. We vastly overspent with debt fueled money and now our economy needs more money like a drug to avoid a pullback to the economic reality that we can only consume what we produce. Currently we are consuming 1.5 trillion dollars more than we produce, hence our deficit.

This is what Mises is referring to when he says that credit expansions ultimately end in a crack up boom.

We will keep inflating, and inflating until the whole mess collapses under its own weight.

[MediumTex]

Austerity is really the only solution but that is nearly politically impossible and its effects on the economy would devastate tax revenues by killing the economy driving us deeper into debt.

Can you name one example of austerity programs working?

Read Naomi Klein's "The Shock Doctrine" for another perspective on how poorly most austerity programs actually work.

[doodle]

MT,

Human population growth has also gone parabolic in the last 100 years or so.  Do you foresee a mass human die-off in the near future?

That depends on whether we can innovate ourselves into a new form of energy soon enough. If fossil fuels run out before we find that energy, or the earth has some sort of climactic shift we will have a huge die off.

HUmans have put themselves again in a precarious state by leverging up based on the idea of a rosy future scenario. Just like the economic collapse happens when that rosy scenario doesn't happen, so will we face an ugly human collapse if everything doesn't line up just right.

This is why humans shock me with how stupid they are. Why is it necessary to run the world without a margin for error? It is asinine.

If you look at current food surplus right now we have less than 6 months of food in storage. A couple of bad harvests and things will get ugly.

[moda0306]

doodle,

Absolutely nothing wrong with everything you just said.  All your predictions regarding our debt bubble, though, indicate deflation and phenominal treasury bond performance.  Our arguments of what the government SHOULD be doing vs how treasuries will perform in certain economic environments are probably two different ones to be had.

By phenominal treasury bond performance, I don't mean any of the following:

1) Good government
2) Proper allocation of resources
3) Sustainable environmental/economic policy
4) Prosperity
5) US dominance
6) Low natural resource prices
7) That fiat currencies are da BOMB
9) That fractional reserve banking is da SH!T

I think you can see where I'm going.  I think you're arguing for the gold standard, and that's an argument to be had, but probably not for the reasons a lot of gold bugs try to sell you (currency collapse, etc).

I love this, and I think we're really breaking into where your thoughts on government are probably leading you a bit astray. Too much of our arguments have sounded like we are advocating high-deficit policies... which we may be... but we should be focusing on the behavior of treasuries in different economic environments, not what strategy Bernanke/Geithner should be pursuing.

[doodle]

MT,

I have said before that I don't think austerity works. The only solution is default...wiping the slate clean, and starting again. As Marc Faber puts it....it will be like rebooting the computer.

We need to reboot the global financial system.

I am not going to spend my life paying off my parents generations debts as well as their astronomical medical care and social security.

Its either inflation or straight up default. Thats what I'm voting for.

[doodle]

Moda,

If the government moves to the Simpson-Bowles plan and starts showing some maturity then I agree with you tha treasuries would be the place to be. We would gradually deflate the bubble and return to prosperity.

Does anything with our government indicate that they will act like mature adults?

We have a window of opportunity here. If we don't get sanity in the next 5 years and a plan you can write off the optimistic scenario.

There is a point of no return where inflating debts or outright default are the only ways out.

We've tried to implement fiscal responsibility before. It didn't quite work out: http://en.wikipedia.org/wiki/Gramm%E2%8 ... Budget_Act

or here: http://en.wikipedia.org/wiki/Budget_Enf ... ct_of_1990

What did GW say: Fool me once, shame on — shame on you. Fool me — you can't get fooled again

[MediumTex]

That depends on whether we can innovate ourselves into a new form of energy soon enough. If fossil fuels run out before we find that energy, or the earth has some sort of climactic shift we will have a huge die off.

But WHEN?  I want to know when.  I'm not interested in worrying about things that will happen decades or centuries from now.

If we can't determine when the cataclysm will occur, what's the point of worrying about it?  We're already as protected as we can be with the PP, so why not just go to a movie or have a sandwich or dig a hole in the ground to hide in?

If there is no concrete action to be taken, why waste mental calories fretting about it?

Humans have put themselves again in a precarious state by leverging up based on the idea of a rosy future scenario. Just like the economic collapse happens when that rosy scenario doesn't happen, so will we face an ugly human collapse if everything doesn't line up just right.

To quote Early from Kalifornia: "I know that you idget."

The question is what are we going to do as individuals in the face of that knowledge, and I think we still owe it to ourselves to make our way through life with as much calm and poise as we can.  We didn't make the system like this and it's not our job as individuals to fix it. 

This is why humans shock me with how stupid they are. Why is it necessary to run the world without a margin for error? It is asinine.

If you look at current food surplus right now we have less than 6 months of food in storage. A couple of bad harvests and things will get ugly.

If you look at the way species evolve, it is with a very definite time preference for the present.  If something works in the present, virtually all animals have no regard for (or way of even conceiving) the effects it might have in the future.

Humans have developed the ability to conceive of and prepare for the future and balance it with the needs of the present.  This ability, however, is not without its own boundaries, and you will find that humans' ability to conceive of and meaningfully prepare for the future begins to deteriorate a lot as you get farther out into the future. 

People are much better at preparing for tomorrow, next week and next month than they are at preparing for 10, 50 and 100 years from now.  This characteristic is not a matter of stupidity, though; rather, it is the product of being adapted to an environment that has changed faster than the evolutionary process can keep up with, and we now have the NEED to conceive of, prepare for and react to future scenarios that simply didn't exist 10,000 years ago.  Adapting to such changes in habitat take time, and frequently a species' evolutionary development can't keep up with the speed of these changes, and that's why extinction is such a common event in the history of life on this planet.

Will we meet a different fate?  I don't know.  We've done a good job so far of meeting the challenges to survival that have arisen, but like a herd of reindeer on an island, the long term challenges to our survival will probably be from problems that we create for ourselves.

[doodle]

When are we going to run out of oil?

The folks at the IEA already think we have hit the peak. I guess its just a question of how steep the curve on the other side is.

http://www.energybulletin.net/stories/2 ... s-peak-oil

[MediumTex]

When are we going to run out of oil?

The folks at the IEA already think we have hit the peak. I guess its just a question of how steep the curve on the other side is.

http://www.energybulletin.net/stories/2 ... s-peak-oil

Yes, that is the question.

Unfortunately, people still want to talk about oil in terms of "running out" as opposed to the much more important world flow rate.  We will never "run out", we will simply see production continue to decline beyond a certain point. 

How will society respond to this development?  In the peak oil community, people like to joke about whether it will be Mad Max or Little House on the Prairie. 

Who knows?

[doodle]

Considering that oil is a major input of our modern food production system which sustains 7 billion people, I'm thinking more Mad Max than Little House on the Prarie.....more like Donner Party.

Maybe we will invent nuclear powered farm tools to get us by.

[Gumby]

Doodle, ultimately it seems that you are worried about the failure of our ability to take on new debt.

The part that you're not understanding is that we will always be able to take on new debt as long as citizens have a desire to save their money. Don't believe me?

Let's take a look at the most recent 1-year Treasury Auction that we currently have on record:

(Yes... these bonds mature well past our "Default" date)



Even on the verge of default, and huge amounts of debt on our balance sheet, the demand for bonds from the Direct and Indirect bidders was astronomical in this auction (oversubscribed by 4:1). Those Direct and Indirect bidders could have almost covered the entire auction on their own — and it's quite common to see the Direct and Indirect bidders show even more enthusiasm.

But, look at the action from the Primary Dealers...

The Primary Dealer demand was more than THREE TIMES greater than the amount of debt being auctioned off.

But, how can this be? A nation on the verge of default, and a dire future ahead of it shouldn't be able to auction off its bonds with such high demand, right?

Let's ask the NY Fed how this really works...

Open Market Operations: Gathering Information, Preparing to Act

Staff on the Desk start each workday by gathering information about the market's activities from a number of sources. The Fed's traders discuss with the primary dealers how the day might unfold in the securities market and how the dealers' task of financing their securities positions is progressing. Desk staff also talk with the large banks about their reserve needs and the banks' plans for meeting them and with fed funds brokers about activities in that market.

Reserve forecasters at the New York Fed and at the Board of Governors in Washington, D.C., compile data on bank reserves for the previous day and make projections of factors that could affect reserves for future days. The staff also receives information from the Treasury about its balance at the Federal Reserve and assists the Treasury in managing this balance and Treasury accounts at commercial banks.

Following the discussion with the Treasury, forecasts of reserves are completed. Then, after reviewing all of the information gathered from the various sources, Desk staff develop a plan of action for the day.

That plan is reviewed with interested parties around the system during a conference call held each morning. Conditions in financial markets, including domestic securities and money markets and foreign exchange markets also are reviewed at this time.

Source: http://www.newyorkfed.org/aboutthefed/f ... fed32.html

The Treasury calls up the Fed to get a sense about what each auction should look like. The Fed coordinates with the Primary Dealers to monitor reserves, round them up, and then target them — making sure the auction is always oversubscribed. And they have a few conference calls to make sure everyone is on the same page. It is a highly orchestrated event — nothing more than a way to drain excess reserves, target interest rates and satisfy Congress's old gold-standard-era mandate that all spending must be "funded" by Treasury bonds.

So, what if the Primary Dealers don't want to take part in the auction? Here's the best part... The Primary Dealers are contractually obligated to take part in these auctions.

Administration of Relationships with Primary Dealers

The primary dealers serve, first and foremost, as trading counterparties of the Federal Reserve Bank of New York (The New York Fed) in its implementation of monetary policy. This role includes the obligations to: (i) participate consistently as counterparty to the New York Fed in its execution of open market operations to carry out U.S. monetary policy pursuant to the direction of the Federal Open Market Committee (FOMC); and (ii) provide the New York Fed’s trading desk with market information and analysis helpful in the formulation and implementation of monetary policy. Primary dealers are also required to participate in all auctions of U.S. government debt and to make reasonable markets for the New York Fed when it transacts on behalf of its foreign official account-holders.

See: http://www.newyorkfed.org/markets/pride ... icies.html

If we need to wage a war against another country, we don't pick up the phone to China and ask them to buy our bonds. Not at all. We simply spend the money and we issue the bonds in the highly orchestrated manner described above — draining excess reserves from banks and brokers.

As long as Americans are willing to save their money, there will always be excess reserves, and therefore, there will always be a demand for US Treasury bonds. And even if the Primary Dealers are in trouble, the Fed can always help them out.

Now you can see why the so-called "bond vigilantes" don't want to play ball in this game where the house determines all of the rules. That doesn't stop politicians and pundits from scaring you into believing that 'nobody will buy our bonds.' Of course people will buy our bonds. We make sure of it!

And in fact, what we see is that we don't even need China to buy our bonds. So, we can never run out of money in this situation. There will always be a market for Treasury bonds as long as the Primary Dealers exist and satisfy their obligations in the market.

If China wants to take the US Dollars we give them and return them to the Treasury, so be it. The same thing with households. If we "save" our money, it just ends up back at the Treasury anyhow. We give it back in exchange for compounded interest and safety. And if we spend our money, well, that's good for the economy.

The textbook explanation of how the bond market works only applies to countries that don't control their own currency. For the US (and countries like Japan), it's just a highly coordinated way to influence monetary policy. This is why we aren't, and never will be, Greece.

It's very unlikely that the Treasury market could fail. As you can see by the example above, even in the face of a serious default, we have Treasury Bond auctions oversubscribed by more than 4:1.

[doodle]

Gumby, why would citizens have a desire to save their money with negative interests in a currency that is being purposely devalued?

Can you think of another international currency against which the US dollar has appreciated over the last 5 years?

Looking at CPI data which indicates ~3% inflation, and short term treasury yields of 0% this is a pretty poor investment.

Does the government have the endless ability to issue treasuries at 0%?

What happens if you take the issuance of debt to its logical conclusion. Can we have debt to GDP ratios of 1000/1 or 10,000/1. Where does it have to stop?  

Does it make you feel comfortable that your money has become a policy tool of your government instead of a store of value representative of your hardwork and effort?

[Gumby]

Gumby, why would citizens have a desire to save their money with negative interests in a currency that is being purposely devalued?

What other choice do they have? Clearly the Primary Dealers have lots of excess reserves — so, people must be saving their money. Perhaps they are too scared to invest that money? Think about it. If people had the courage to invest or spend that money, our economy would be doing great right now. And that would be a good thing.

Can you think of another international currency against which the US dollar has appreciated over the last 5 years?

All currencies are trying to devalue right now. Though, we seem to be more successful at it than most. I agree this causes problems (in terms of oil and natural resources). I suspect that's why we wage many of our wars. It's terrible.

Looking at CPI data which indicates ~3% inflation, and short term treasury yields of 0% this is a pretty poor investment.

I agree. But, I don't know what to tell you. People are saving. The money is being invested in Treasuries whether you like it or not. People always have a desire to save. The Japanese, as you know, are huge savers. Same deal for them. It's been well documented that many Japanese would rather invest in Government Bonds than risk them in corporations. They feel it's safer.

Does the government have the endless ability to issue treasuries at 0%?

Of course it does. 0% Treasuries literally means "free" money (i.e. no cost to the US government)!

But, remember, the government uses those auctions to target any interest rate they want — whatever they deem appropriate for the state of the economy.

What happens if you take the issuance of debt to its logical conclusion. Can we have debt to GDP ratios of 1000/1 or 10,000/1. Where does it have to stop?

As I said in another thread. The CBO is predicting the ratio of debt to GDP at 200% by 2035 and 300% by 2050. Remember MMT is just a framework on how a government should expand and contract the debt to respond to economy. It doesn't even remotely suggest that we should be spending recklessly. And it doesn't prevent a stupid government from putting us in the toilet. MMT just describes the framework in which the currency is used. Nothing more.

[moda0306]

doodle,

How much do you have saved in cash & bonds?  Do you just go out and buy canned food and gold because you think that stuff will be more expensive tomorrow?  Just because people will be able to buy 2% less next year than they do this year with the same money doesn't mean they won't attempt to save.

I really feel like you are starting with your conclusion that we HAVE to have national debt problems that result in default or hyperinflation and rising rates, and backing into your argument from there.  Between having a sovereign currency and the collapse of private credit and the private-sector debt overhang, we've tried to explain plenty of reasons why we probably won't have significantly higher rates or high inflation in the future, but you seem to want to go back to tired non-arguments over and over.

You are letting your emotions surrounding the issue of government control and manipulation cloud your judgement as to how a bond issued in a sovereign global reserve currency of the world's most powerful government should behave given certain economic stimuli.

As to how far we can go into national debt before worrying?  I don't know if it ever matters, but I want to hear from you the mechanics of how a failure would result... and if we're still only half-way to where Japan is with them paying SUPER low rates, why we have anything to fear for some time to come.  Please answer me this: If we have higher private-sector debt, why should that mean LESS deflation than Japan?  When we get thrown into recessions, we'll have MUCH more deleveraging to do that Japan, and therefore could maybe suffer more deflation, all other things being equal.

Your insistence that default is the solution seems odd, because that's probably the very thing that WOULD send us into the very spiral that you fear will happen if we try to spend & monetize.  

[doodle]

I guess I don't feel comfortable with "money" as a safe store of value if it is simply the policy tool of government to achieve some goal. If that is the case then we need to rework the money system or else it becomes impossible for a person to confidently save and invest for the future. I need to be able to make future projections about my money and if the government can come in and issue a trillion new dollars tomorrow to meet another objective then I am screwed.

This quote from you

If people had the courage to invest or spend that money, our economy would be doing great right now. And that would be a good thing.

indicates the danger of MMT to me because it implies a constant economic expansion. It is obvious that the MMT policies that tried to reinflate the tech bubble led to the housing bubble. Sometimes the economy needs to go through a contraction where it finds a lower base upon which to build again. This shouldn't be too painful if the credit and debt haven't been expanded too greatly, which is why a stable money supply and tight reserve ratios should be kept. This forces moderate healthy growth by driving up the cost of money naturally as reserves are exhausted.

In contrast, today we have a bunch of centralized planners trying to manipulate the money supply and interest rates to achieve some economic utopia. This has led to nothing but bubbles and the decimation of many peoples savings.

[MediumTex]

doodle,

What are you going to do?

I understand your frustration, but how are you going to translate that frustration into action?

I think we have established that we are living in a system based upon some absurd assumptions.

So what now?

[moda0306]

doodle,

I share some of those concerns.

The big question is, are all those evils of government manipulation going to result in 1) an ultimate deflation and lowering of interest rates, 2) a long malaise of malinvestment and trying to blow bubbles back up, or 3) a complete "release" from the dollar in some sort of hyperinflation.

I think we've said about every which way possible that #1 and #2 are much more likely than #3.  Not because our government made good choices, but simply because that's the mechanics of the currency we're under.

Like I tried to state earlier, treasuries doing well doesn't reflect positively on government or even a monetary/fiscal policy.  It is a separate argument to say "we won't slide into inflation" than "deficits of yesteryear were all great ideas."

[Gumby]

I guess I don't feel comfortable with "money" as a safe store of value if it is simply the policy tool of government to achieve some goal.

You don't have a choice. If you own a bank account, the money has likely been invested in Treasuries anyhow. The only difference is that the bank is making a small profit on your account.

If that is the case then we need to rework the money system or else it becomes impossible for a person to confidently save and invest for the future.

Now you're not making any sense. People save all the time, and they've been doing it for decades. Of course it's possible to save and invest wisely. We just need to keep inflation low to make sure it's easy to do.

I need to be able to make future projections about my money and if the government can come in and issue a trillion new dollars tomorrow to meet another objective then I am screwed.

You're absolutely right. I don't know how many times we have to say it. Government can do stupid things. That's a government problem.

This quote from you

If people had the courage to invest or spend that money, our economy would be doing great right now. And that would be a good thing.

indicates the danger of MMT to me because it implies a constant economic expansion. It is obvious that the MMT policies that tried to reinflate the tech bubble led to the housing bubble.

Um. Now you're not making any sense. MMT doesn't have any "policies" that have ever been implemented. "MMTers" are typically for efficient spending, lower taxes, reducing or eliminating the Fed’s role in markets, altering economic focus from Wall St to Main St, ending this financialization and getting back to full employment. There are no MMTers in politics. None. MMT itself describes the playing field. I hoped you would understand that by now, but now I'm beginning to think you have larger issues on how you come to conclusions about everything.

Sometimes the economy needs to go through a contraction where it finds a lower base upon which to build again. This shouldn't be too painful if the credit and debt haven't been expanded too greatly, which is why a stable money supply and tight reserve ratios should be kept. This forces moderate healthy growth by driving up the cost of money naturally as reserves are exhausted.

I think what you're saying is that gold prevents a government from overstepping its boundaries. Fine. But, we know that governments throw away the gold standard when it prevents their ability to defend their own security. So, what good is the reserve constraint if governments feel too restrained by gold?

In contrast, today we have a bunch of centralized planners trying to manipulate the money supply and interest rates to achieve some economic utopia. This has led to nothing but bubbles and the decimation of many peoples savings.

I think MMTers would most definitely agree with you....

Who Owns Washington The Cannibalists of Course

When Finance Goes Too Far

MMT is politically agnostic. It doesn't have an agenda. It merely describes a fiat monetary framework. An "MMTer" can be conservative or liberal in their own right — though, they tend to be politically agnostic as well.

[moda0306]

I tend to think that proponents of the gold standard often try to preach currency collapse when 1) it makes them sound extremist and ridiculous, and 2) they don't need to.  There are plenty of questions to ask about the negatives of our fiscal/monetary policy without getting into whether our currency actually will collapse or not... in fact I believe that some of the problems currency manipulations cause keep bringing investors back to safe assets like treasuries:

1) Is currency manipulation fair
2) How much malinvestment does it lead to and what are the effects of that malinvestment
3) How much crony capitalism & malinvestment results from fractional reserve banking
4) How much illegitimate control does a fiat currency give government
5) Is perpetual growth environmentally/economically sustainable, and therefore should it be our goal
6) Can an economy run on a fixed (or very slowly growing) money supply

To say that our current currency system won't result in hyperinflation or high interest rates in this environment isn't to say that there aren't tons of other concerns around it, but it DOES help one invest.  This is why HB could decry big government and fiat currencies but also view the bonds issued by a big government in denomination of a fiat currency as CRUCIAL assets to hold in a PP.

It's this cognitive paradox (as well as getting gold-haters to accept its role and play the "greater fool" game) that will forever keep the PP in the shadows, IMO.

[doodle]

MediumTex,

As for what I am going to do....I think something along the lines of what AgAu has done. A smaller PP with a larger variable portfolio.
For the first time in my life I understand where the demand for gold in countries like India comes from. When you have a government that acts irresponsibly, you are kind of driven into it.

Unfortunately, I think that a large amount of the economic stagnation and joblessness that we are experiencing right now is because the governments squabbling and childish antics are scaring people out of making long term investments. For me it is less important "what" the rules are than the consistency of those rules. I think the business community has echoed this sentiment.....just make the rules...and then we will adjust and invest according to that environment. It is uncertainty that kills business more than anything.

This debt ceiling vote will come down to the wire on Tuesday and then we will breathe a sigh of relief. However, it will only be a temporary relief because we are facing much more complicated issues ahead. Sadly, the politicians know what needs to get done, but don't seem to have the ability to bridge the partisan divide to accomplish anything. I have seen many impressive ideas from think tanks on CSPAN, but short of a crisis, I don't see any of them coming to pass.

Everyone has a different view on where this rocky road will lead us...some more optimistic than others. As I have said before, at the end of the day everyone must come to peace with their plan and hope for the best.

I am no expert on MMT but I think one of the biggest mistakes that modern economic theory makes is the fundamentally erroneous assumption that man is a rational economic maximizer. Corruption, greed, and cunning seem to be totally absent from the majority of economic models. Most systems work great until you introduce them to real humans.  Although all of us have grown up under our current worldwide fiat money experiment, it is still in its infancy. Maybe it will last, however if history is any guide, I wouldn't bet on it.

[MediumTex]

MediumTex,

As for what I am going to do....A smaller PP with a larger variable portfolio.

I assume you are doing this because you want to take on more risk and potentially reap larger rewards (or losses) than the PP has historically provided, right?

In other words, you are saying that a 100% PP allocation is, for you, too conservative.  Is that correct?

I just want to make sure I understand your strategy.

The reason I ask is that you are clearly talking about taking on more risk, and I want to make sure that I understand your rationale for doing this since you seem to be a pretty risk-averse person.

[moda0306]

doodle,

I'm just going to throw my Keynesian buddies a bone out there because I think they're right when they talk about the "confidence fairy" in business.  

Businesses want demand in this environment.  Period.  They may not like the uncertainty and taxes and regulation, but take those away and keep their factory running at 75% capacity, and they aren't going to all of a sudden open up a new addition to the factory or hire somebody.  They simple earn a bit more and pocket it... probably invest in something less risky.

They need demand before they'll create more jobs.  Demand comes from consumers.

Now we know consumers don't care about regulation... and especially today, with damaged household balance sheets, they're not going to consume unless they have higher, more reliable income and/or improved balance sheets.

That's where I find the supply-siders to be in complete separation from reality.  No amount of deregulation or tax cuts on the production end is going to magically create jobs, because "the factory ain't at full capacity."  That is literally the very simple, straightforward fact that it comes down to.  The government could eliminate regulation, cut supply-side taxes by 2/3, send Jennifer Aniston in to service the owner for being such a good entrepreneur, significantly reduce union power, enact strict tort reform, and you know what the business owner is going to ask at the end of the day when deciding whether to hire?  "Are we running near full capacity?"  The answer will still be no.

Why?  Because households are still in a rut of high risk of unemployment, low income, and crappy household balance sheets.

This is the crux of the entire policy debate, and I find it's where the right falls completely flat with their narrative.

Now am I saying it's more "moral" to send checks out to all these families at the expense of savers?  Not really.  But let's not act like creating a little more tax and regulatory certainty is going to create jobs.  It's mathmatically just not logical at all.