The U.S. economy only grew by a rate of 2.4 percent for all of 2014. Whereas, The Wall Street Journal reported China's economy expanded at 7.4% in 2014 — and that was the slowest in decades. But Bloomberg also reports that it could be much higher. (But yet, another post at Zerohedge says it could be les than 3% — but still higher than the U.S.
China's economy has already overtaken the U.S. to be the world's largest economy — lifting 500,000 of their people into the middle-class. And by 2022, China could have over 630 million — while the U.S. middle-class continues to decline. Look at what China has been doing for the past 30 years while Rome burned.
In another article at Zerohedge, regarding quantitative easing (QE), the author presents the chart below and challenges the Fed for saying "the lesson of QE is that it works fairly well". The bankers and corporations got rich instead of repairing our infrastructure.
Now read this from the Wall Street Journal: Confessions of a Quantitative Easer: "I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time."
And from 2 years ago at Al Jazeera: “Excess [reserves] have exploded from $267 billion in October 2008 to $2.2 trillion in September 2013. Banks aren’t willing to lend the money out or because there simply isn’t the demand for the loans that could be created. Either way, the banks don’t have to lend excess reserves to realize a [profit] because the Federal Reserve pays 0.25% interest on them."
Recently the New York Times reported that in December 2009, "the Fed had arrested the financial crisis, but the moment would also turn out to be the beginning of a yearslong series of failures to provide a sufficiently large dose of stimulus to restore the battered American economy to its previous health ... Former Fed chair Ben Bernanke joked last year, “The problem with Q.E. is it works in practice, but it doesn’t work in theory.” And the current Fed chair Janet Yellen has said, “On theoretical grounds, I believe there’s a very strong case that they [Q.E.] should have some effect, but it has been awfully hard to identify exactly what that effect is. I would say the benefits don’t merit the costs."
From a comment at Mark Thoma's blog "It is a shame that Congress did not do more in terms of fiscal stimulus in 2009. It is also a crime that fiscal policy turned to austerity right after that ... The Federal Reserve does not set fiscal policy. And Bernanke repeatedly pleaded with Congress to do stimulus not austerity. Of course the idiots in Congress only listen to hacks like Kudlow." [Lawrence Kudlow is a conservative economist and TV host on CNBC.]
China's Premier Li Keqiang, in his state-of-the-nation report to the Communist Party-run legislature, lowered the target for economic growth to approximately 7 percent (Last year’s actual expansion of 7.4 percent was the country’s slowest since 1990.)
Premier Li also announced new policies and programs that he said would encourage a more robust private sector to create jobs and foster innovation, moving the country away from its dependence on government-led infrastructure investment, heavy industry and low-end exports. And he promised to add 10 million more urban jobs, increase monthly pension payments to retirees by 10 percent, build 7.4 million units of government-subsidized housing and construct nearly 5,000 miles of rail.
Another comment at Mark Thoma's blog: "Chinese growth of Gross Domestic Product has averaged 9.7% yearly between 1977 and 2014, while per capita GDP growth has averaged 8.7% yearly between 1977 and 2013."
Since 1947, in India, per-capita income (adjusted for inflation) has grown fivefold. In recent decades, reforms pushed up the country’s once sluggish growth rate to around 8 percent per year (before it fell back a couple of percentage points over the last two years). For years, India’s economic growth rate ranked second among the world’s large economies, after China.
Compared since 1976 to the present...
The Heritage Foundation (the conservative think tank) says they want a balanced budget, while at the same time, also want more defense spending and more tax cuts for the rich.
From the Center on Budget and Policy Priorities (CBPP) March 2015:
Congressional leaders are expected to unveil budget proposals in coming weeks that would reduce projected deficits solely by cutting programs and to justify that approach by claiming that the size and reach of the federal government are growing dramatically. The data do not support this claim ...
Federal program spending outside Social Security and Medicare has fallen below its historical average and is projected to decline further under current policies. Total spending on federal programs outside Social Security and Medicare will fall to 11.2 percent of GDP in 2015 — below the 40-year average of 12.2 percent — and is projected to decline further over the next ten years, to 10.0 percent in 2025.
The bottom line is that under existing policies, federal program spending is expected to grow little over the next decade as a share of the economy, and the slight expansion reflects the effects of an aging population and rising per-person health costs on Social Security and Medicare. Outside these two programs, program spending is already historically low as a percent of GDP and will continue declining over the coming decade.
CBPP footnote: The long-term outlook would improve considerably if policymakers took steps to improve the long-run solvency of the Social Security and Medicare Hospital Insurance (HI) trust funds."
[* So why raise SS/Medicare payroll tax rates by eliminating the "cap" and taxing capital gains for Social Security, while also means-testing so that those with over $200,000 in annual income get reduced benefits?]