Uncertainty Drives Down Business Expectations : A Progressive Socialist Strategy

The system is working to perfection. Keeping the business community off balance is one of the basic strategies that the progressives socialist democrats are using to throttle back the American economy.

It is their intention to lower the expectations for future investments for the business community as a means to level the playing field, bring about universal dependence on the government through regulation and law that will dictate outcomes. This is the tyranny of control by the few.

If you find understanding how progressive socialism works difficult in our society that has always been one that relied on individual initiative and hard work to succeed, then understand what we are seeing today in the Obama administrations push for universal health care and the manipulation of the money supply by the Federal Reserve, is a means to their ends for control of the population.

Again, this hasn't happened over night but in real terms the speed with which it has occurred is unprecedented in our history. What worries me the most is it appears many of us are willing to accept dependency as a way of life. It appears that many are willing to stand and wait for others to decide their fate.

Remember again the frog swimming around in the pot of water, when he started to swim around, the water was nice and cool, paying no attention to what was going on around him. But later, when the fire was added to the pot and the water began to boil, it was to late to make the jump for survival.

Know this, if you're swimming around in the pot of high tech machines and high social adventures, forgetting how all these good times came about, then don't be surprised when the water become unbearable with no good alternatives for survival.

Don't look around for others to blame because you might be all alone in the hot water.

The Role of Uncertainty in the Great Recession
Source: Jesús Fernández-Villaverde, Pablo Guerrón-Quintana, Keith Keuster and Juan Rubio-Ramírez, "Fiscal Uncertainty and Economic Activity," Cato Institute, June 2014

July 2, 2014

Since the Great Recession, uncertainty about fiscal policy has slowed recovery in the U.S. economy, and little consensus exists among policymakers about what to do going forward, write Jesús Fernández-Villaverde, Pablo Guerrón-Quintana, Keith Keuster and Juan Rubio-Ramírez for the Cato Institute.

The researchers created a model to investigate whether increased uncertainty about fiscal policy (including government spending and tax increases or cuts) has a detrimental impact on economic activity. They found:

• Fiscal uncertainty reduces output, consumption and investment. Additionally, working hours drop and remain flat for several quarters due to uncertainty.
• Uncertainty regarding the capital-income-tax rate has the same negative effect on output as does a significant (30-point) increase in the federal funds rate -- the interest rate on short-term borrowing between banks.
• When the economy has very low nominal interest rates (as the United States does now), the effects of uncertainty are magnified, lowering output by 1.7 percent and investment by 7.9 percent.

The study notes that uncertainty in fiscal policy is especially important when interest rates hit the zero lower bound, because the interest rate cannot drop to ameliorate the problems caused by fiscal uncertainty.