I saw an intersting item this morning on the Chinese economy. Click here to see the entire article. Charles Hurtzler of the Associated Press reports that China's "economic growth rebounded to 10.7% in the final quarter of 2009." That's about twice the rate reported for the U.S., where the Bureau of Economic Analysis of the Commerce Department reports a 5.9% gain for the fourth quarter compared to the third quarter of '09.
So, how did they do it? "China, the world's third largest economy, escaped the worst of the global financial crisis by ordering $1.4 trillion in bank lending and government stimulus." The U.S. stimulus, passed about a year ago, was $787 billion on an economy four times the size of China's.
The Chinese have learned their economic lessons from the Westerners well. When demand slumps and the economy enters recession the government can supply the demand itself and spur recovery. That was the process first put forward in the New Deal and explained by the British economist John Maynard Keynes in his General Theory of Employment, Interest and Money in 1936.
Once again, the evidence shows it works. Calls to slash spending and lay off millions more workers now would lead to a downward spiral of demand decline, rising unemployment and back into severe recession. There will be a time to work on the deficit, but now is not that time. That will be a project to address when employment and demand are running strong, such as they were in the late 1990s when we were running surpluses and paying down the debt.
1 comment:
Mr.Natoli you need to send this article to the big boys at the white house, maybe they can learn somthing from simple wisdom in- stead of listening to the so called economic experts that are running the counrty.Let them learn from a humble history professior in Visalia Ca.Or let history repeat it's self.
Post a Comment