Economies are like engines, and the money flowing through the economy is like the oil. I like this analogy because too much motor oil in an engine is similar to a bubble in the economy in that it will eventually leave and generally not in a polite manner.
The problem we see now is that when the engine is low on oil, you need to add more. Who gets to add more? The poor and middle classes have been tapped out, and the wealthy and connected have bought off enough politicians to keep from adding some more. Even better, all of this talk of austerity ends with more oil being taken out of our economic engine. It didn’t end particularly well for Hoover, let’s see if it works any better for us.
Posted by Kit