If only it were that simple. You’re assuming that all those jobs would still be there if they had to pay the higher wages that American workers demand. But of course they wouldn’t be, because companies faced with higher costs would hire fewer people — either by automating or simply by downscaling operations. We had a small-scale version of that here in Washington, where some crops rotted in the fields because no workers were available to harvest them due to stricter border enforcement.

This isn’t to say that I think illegal immigration is a good thing, but it’s a very complicated issue, and any solution has to address the needs of industries that rely on cheap labor.

Keynesian monetary policy didn’t cause the mess. I suspect Keynes would have been screeming bloody murder at having his name associated with the stupidity that governments have been pulling. You see with Keynes, the actions taken had to run countercyclical to the business cycle ie. governments spend more when time are bad and less when times are good. He did not advocate spend more and more and more.

The Austrian School is not without guilt in this mess either. The laissez-faire approach to mortgage underwriting, where banks were freely able to overleverage themselves lending money to people who couldn’t pay it back, was certainly part of the problem. A lack of regulation on the RE industries’ ability to make whatever claims they want, and create an illusion of agency when they are little more than salespeople shouldn’t be overlook either. I’m not a big fan of government intervention, but when it’s needed it’s needed.

You should also keep in mind that when you consider money supply, you have to consider all sources of money. It just not what the CBs print but how much it is leveraged up. If you have a leveraged investment account, then you are creating money and thus pushing asset prices higher. Since this is not measured, using money supply to define inflation/deflation doesn’t work well.

See AnnS’s comment above about gold too.

I don’t buy the “deflation is bad” argument. I will wait to buy? What? Will I go hungry and naked? Live without shelter? The price of gasoline/heating oil dropping is a bad thing? Bureacrats can’t regulate deflation, that is why they don’t like it.

What makes you think housing will imporve in the forseeable future? What is going to bring our standard of living back up to the post-bust? FIRE?

Time will tell, but even if successful, I suspect Obama’s jobs will be directed toward the masses and will be relatively low pay.

Keep up the good work.

Maybe Chaney didn’t see it coming–probably too busy watching snuff films–but most intelligent people have honestly seen this coming for years. Deficits do matter. People and nations still reap what they sow. Why not let Cameroon print 12 trillion cameo’s or whatever their currency is? One fiat’s as likely to be renege as the next.

Still this depression was as unavoidable as the sunset. The vacation’s over, back to the 1200 sq ft with Formica counter tops and linoleum floors. So what? People lived without Hummers and 63″ LCD’s for thousands of years. We can do it again. Maybe folks will learn to appreciate a library full of books they can read for free. Or play bridge with their while listening to music–human interaction. It’s really not the end of the world…it’s a new beginning.

@polo: Thx for kudos on TARP cipher, now we know the real plan: (“Taxpayer Annihilation and Rape Program ”)