Occluded Sun wrote:DSMatticus wrote:A consumer class capable of enough domestic spending to make the creation of new firms - and the expansion of existing ones - profitable.
Wrong. You can't simply create new jobs out of nothing. Economics doesn't mix well with busywork.
"There exists sufficient economic demand to incentivize people to allocate resources to the creation of new firms" is not creating jobs out of nothing. Your unspoken hypothesis - unspoken because speaking it would open it to fairly trivial disproval and mockery - is that there exists a supply-side crisis and that there is a shortage of investable funds to allocate because government is a big ol' meanie pants. Growing a pair of balls and
saying that would get you instantly shat on as an idiot who'd never looked at a set of economic stats in their life, and I'm not really interested in tip-toeing around this with a cowardly moron, so let's just cut to the "Occluded Sun is wrong, here's why" thing.
Interest rates are
rock bottom. If there were truly a shortage of investable funds, basic supply and demand would necessitate competition over those investable funds in the form of high returns, i.e. high interest rates. In reality, there is so much money flooding into government bonds and other safe havens that the interest rates in the developed world are basically zero - sometimes even negative, with people losing money in real terms. People would genuinely rather
pay the governments of first-world nations to hold their cash than invest it
anywhere in the world.
The fact of the matter is that Say's law is bullshit. People do not invest money in businesses simply because they have money in their pockets. People invest money in businesses because they expect it to provide them a return on their money greater than other alternatives, because that's how rational actors fucking work. Right now, investors are choosing to put their money in low return government bonds and not into the creation of new businesses. And since the returns on government bonds are currently fucking awful, that immediatelly tells us that investors expect returns on investing in new businesses to be even fucking worse than that, so they won't do it.
Say was a naive idiot who handwaved away the notion that people would ever hoard money in order to create his utopian fantasy of self-balancing economies. Unfortunately, reality is a cruel and persistent mistress, and closing your eyes and going la-la-la doesn't actually make it go away. People do hoard money, all the time, and there are plenty of circumstances where it is completely rational to do so.