Nutshell Economic Status

Deficit and debt increases 2001-2008

Image via Wikipedia

There are a lot of narratives concerning what’s up with the economy. This is the one that makes the most sense to me:

Corporations are sitting on cash because they are uncertain of what the Obama Administration will do to them next.

Corporations are sitting on cash because there is low demand for their goods.

There is low demand for goods because consumers have decided to cut back spending, increase savings, and pay down debt. A wise and logical thing to do.

Unemployment is high because the Fed and the government created and encouraged a vast money and credit bubble to flow into housing and went bust which all such bubbles do when the Fed turns off the money spigot.

It takes time to wipe out all the malinvestment associated with a boom-bust cycle, such as the overproduction of housing, commercial real estate, and related debt.

The government has been doing everything they can to prevent the correction of the malinvestment, thus dragging out the recession and causing unemployment to stay high.

via The Evils Of … Cartoons? | The Daily Capitalist.

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