Cut your cutting

Mental note to self:

[no more box cutters in Laguna's threads]

The ultimate problem is that the answer is somewhere in the middle...but that isn't politically powerful...better off calling one side fascists or nazists or dictators or communists and the other side doing the same.

I'm listening to the massive idiot Sharron Angle who almost became a member of the Senate talk about 'American Exceptionalism', we really are an ignorant people...it makes me sad. We elect people to national public office that constantly talk about the Constitution but don't even know what is in it yet constantly proclaim how we are so 'exceptional'.

There are too few intelligent conversations about actual issues and too many idiotic debates about issues based on religious beliefs which are supposed to be left out of our government. Although I believe that both parties are ultimately corrupt in their own ways and that neither actually has the answers necessary to solve problems because the real answers lie somewhere in between; I'll continue to vote on the Democratic side until the BS about denying the LGBT community their equal rights stops or well...you know the rest.

This country is ruled by xenophobia which is why the stupid conspiracy theories are so frustrating, they're just a repeat of the same xenophobia but instead of it being focused on race, creed, color or sexuality, it's focused on 'they'...either way it's just a bunch of people scapegoating one group or another for their own problems.

Americans need to step the f*ck up, learn about the issues, spend more time focused on their own futures than they do on watching Jersey Shore and then get their *sses out to vote. Then maybe we can start having logical conversations about issues instead of time wasting conversations about whether or not intelligent design should be taught in schools as a competing or superior theory to evolution.

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Wasting hundreds of billions of dollars is harmful to a nation's economy, no matter under what banner it is perpetrated. Keynes didn't advocate pisspoor allocation of resources, did he?<!-/Quote-!>

We economists joke a bit and say Keynes advocated the digging and filling of holes to increase output. While he did say this was better than nothing, he also remarked it was still unreasonable.

It is unreasonable, because there are far better alternatives (public investment) and because all of these measures aren't permanent. They are to be used temporarily to put the economy on track.

Here is the quote:

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To dig holes in the ground, paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services. It is not reasonable, however, that a sensible community should be content to remain dependent on such fortuitous and often wasteful mitigations when once we understand the influences upon which effective demand depends.<!-/Quote-!>

Fortunately for us, we are facing a (negative) shock on demand, and not on supply or a retraction of the natural rate of unemployment. It is something we can deal with, if there is political will. Unfortunately for us, we are on a liquidity trap and the acknowledgement of this whole situation hasn't sunk in. Or maybe it is beginning to... "In the framework of the new globalisation, the first priority is employment, the second priority is employment and the third priority is employment."

Laguna, can you lead the Presidential Economic Team? I am forwarding your resume to Congress.org and to President Barack Obama himself. Once again the stimulus, like the last is going to be too small, have minimal effect, temporarily benefit Wall Street only, then get painted as another Phail. Dammnit

Replace Tim and Ben, America wins. LG for Presi.... err Economic Czar

It is a joke, Which American didn't think Allen Greenspan was a mega economic guru? He wrote books too. Turns out to be only a smooth talking Federal Reserve theif working for the money masters.

I came across this while looking to see what books Greenspan had written. I found the title appropriate.

Where Keynes Went Wrong: And Why World Governments Keep Creating Inflation, Bubbles, and Busts.
by: Hunter Lewis

How much do you want to bet this guy Keynes isn't for real, I'm betting he's only there to convince the masses that more and more debt and enslavement of future generations to pay that debt is the right thing to do. Right up their alley. Maybe not but I wouldn't be a bit suprised. I haven't investigated.


Here's the thing about conspearacy theories:


Everyone is entitled to their own oppinion.

Nobody is entitled to their own facts.

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That's to say to America, that yes, Obama is on the right track. Spend! spend! spend!<!-/Quote-!>

There are those who believe we need to stop Obama.

If government spending led to prosperity, the US and other leading industrial nations would have booming economies. Obviously, this is not the current situation. One could argue that higher levels of government spending ( percentage of GDP ) actually slow economic growth. If you examine the performance of the US economy in the 80's and 90's, you would notice a decent growth rate (4-5%). In the 2000's, our level of govt spending increased and our growth rate dropped. Also, when you add rapidly increasing debt levels, more of the spending goes toward servicing the debt, which doesn't impact the total demand of the economy.

One thing is certain, the govt burning money and printing it to fight pointless wars based on lies and percieved fears perpetuated by the Governement, is less constructive than economic stimulus. At least some benefits arise from stimulus. When we burn mprinted money to fight wars, people die, and we create a buttload of collateral damage... on our own soil. Therefore, spend spend spend ON AMERICA, not bullets bombs and death. Homeless vets who return home and can't get a job, or worse come home with Gulf War Syndrome, or PTSD, or some other mental condition. We pay for that, but I am sure you'll find a reason to justify the financing of death instead of injecting cash into our own economy. It's all fake money who cares anyway. The system was just as flawed and doomed to fail when we had a fraction of the deficit we currently carry now.

Spend the fake money for Gawd's sake.

mmm... almonds

Keynes was a successful investor: he viewed the stock market as like a beauty contest where people vote not according to their own preferences, but for who they think other people will vote for. He also made the famous purchase and perusal of Newton's trunk of papers, concluding that the great Newton was not the first of the age of reason, but the last of the magicians. Keynes was a smart guy.

Nevertheless, he wrote his great economic works in a certain place and time. The assumptions that the person digging (and filling?) the hole would otherwise have been doing nothing useful, and that the money the person earned and intended to spend would a) not have been otherwise spent by those who were paying him, and b) not have been spent anyway by the digger, are less self-evident today than in the 1930s.

Now this is turning into some reasonable debate. I like it

Solomon - Many were on to Greenspan a LONG time ago. Check out 'Bailout Nation' by Barry Ritholtz, it's a great book written from a very moderate perspective. He talks much more about the real issues in the American economy which have much more to do with monetary policy and sustaining asset prices than they do with tax rates, marginal or corporate.

Danny - It's true that debt can slow the economy long term, I don't think anyone denies that, not even very liberal economists. The issue is whether short term deficit spending designed to stimulate demand is effective. Then of course the other issue is the timing of government's actions and even more importantly, the fact that once governments reach a certain budget level they can't seem to ever decrease it, even when the economy is performing very well. As far as GDP growth in the 80's and 90's, we were running sizable deficits then as well, it wasn't until the late 90's that we had a balanced budget.

Take a look:
http://www.cbo.gov/ftpdocs/108xx/doc10871/AppendixF.shtml

Other than 98-01 we've had a deficit every year since the 60's and it was tax cuts in 01, 04 that were supposed to pay for themselves (which they didn't, wouldn't it be great if people understood that we have no idea what the Laffer curve actually looks like nor does it mean that tax cuts always pay for themselves...they rarely do) and then Medicare part D that messed it up. Which by the way all happened under Republican control of the Presidency, the House and the Senate...which is why I find their claims of fiscal responsibility today so hilarious.

Jojo - Good points, I'd say though that today, with 10% unemployment, the digger isn't doing anything useful. As far as being spent otherwise, it's possible but businesses aren't spending much money today, instead it's being stashed away in savings/investments which will *eventually* help the economy (or even worse invested on government debt which is the best argument in my mind against deficits), but the digger would spend them today. The digger spending the money anyway would assume that he was going into debt to spend said money, which is how Americans have been maintaining their standard of life for about 20 years now as income gains in the lower three quintiles has been non-existent, but today the credit markets are still dried up for consumers...so the digger can't do that either.

Oh and Windy, just to feed your conspiracy theory hunger, check out 'Confessions of an Economic Hitman' by John Perkins, true stories that you wish were a conspiracy.

*Yaaawns* Old dry reading/listening. Concentrate on your studies... you aren't schooling me uni_boy.

How do you bail out the banks though?

That's borrowing money to give it to the failing instituiton that shouldn't have the money to loan you, to give back to them, because they are failing. I mean we do have a central bank, it's all one. If the bank you bank at runs out of money the same central bank that supplies my bank supplies yours (in America).

looks like a heist.

...and it's so astronomical! How many Trillions? FYI: 1 trillion seconds ago was 33,000 BC. ~that's how astronomical.

Can you say "hyper-inflation"?

(confessions of an economic hitman is great it's a book, but you can catch his comentary online)

Hey, Honey did you get my message I sent? Oh, and NO! don't spend any more 'fake' money. It ='s labor and my great-great-great-great grandchildren can't afford any more taxes!

Yes Solomon, I'm just digesting the content.

For too long the US has been the biggest consumers of goods in the world. It's like the world produces so we can consume and get fatter(literally and figuratively. And of late the differential between the very rich and the middle class has been widening. We want lower taxes, more jobs and more of more. And we don't want our "freedom" taken away. And btw, don't cut my SS or Medicare. Already today there was a discussion on a noted business channel about imposing a "fat tax" on fat and sugar, like the tax on tobacco, to help Americans watch their weight and also to raise a Trillion dollars in revenue. Keynes and free markets can only work for a little while but in the last analysis we have to self police ourselves to consume less, work harder, learn/teach more, and work together to solve the issues at hand. Solutions don't happen over night. And older people both in the US and in countries where the pop is aging are either going to have to get less or worker longer so the young won't be burdened with all us old farts. "Death panels"? they're already here folks.

Cool... do it like "The Fly"!
Vomit all over it and suck it back up through a straw!

Haha!

Nah take your time lol

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Fortunately for us, we are facing a (negative) shock on demand, and not on supply or a retraction of the natural rate of unemployment. It is something we can deal with, if there is political will. Unfortunately for us, we are on a liquidity trap and the acknowledgment of this whole situation hasn't sunk in. Or maybe it is beginning to... "In the framework of the new globalization, the first priority is employment, the second priority is employment and the third priority is employment."<!-/Quote-!>

There are at least three problems with stimulating the economy with government spending. 1) There are no shovel ready projects ( as Obama now admits), so the impact of the spending is delayed which negates its intended effect. Usually, the money is spent 18/24 months later after the economy has already started recovering. 2) The jobs created by the spending are either temporary, non existent, or too costly per job. In contrast, tax cuts can take effect very quickly, and the jobs created by the private sector are usually less costly per job. 3) If the funds are borrowed, that can have a negative effect on interest rates, private borrowing, and (if debt levels are high enough) consumer confidence. Any government spending projects must create long term employment or have some positive long term effect.

So, I think we need some government projects that would lead to more longer term employment or greater efficiency. Such as building more nuclear power plants and/or upgrading the power grid. Projects like these would create more energy and promote lower production costs. Projects such as repaving roads or building new government office building should be scrapped. Most of our efforts should be toward cutting taxes on employment, and giving business flexibility in what health benefits they offer. I think income tax rates should be frozen at current levels, health care reform delayed or scrapped, financial reform delayed or scrapped, and carbon taxes permanently delayed. Also, no new regulations. These all lead to uncertainty or higher costs, which discourages investment.

I forget macroeconomics clashes with the experience people gather from their own personal finances and business. I don't even know why I'm bothering to reply, but let it be what it may.

It is obvious that government spending, in this context, will clearly improve your economic situation a lot. The aggregate demand of your economic took a serious blow in the stomach: private spending/consumption has and will continue stagnated, investment retracted, government spending didn't increase nowhere as much as you think - look at the numbers above - and your exports still aren't at the same level of 2008. If your government doesn't fulfill its purpose, I don't know why you have one and you will stay in the crapper for a long, long time.

If there is a lesson to be drawn from the Great Depression is that an economy can stay below its potential output for longs and prolonged periods of time. That's to say, market mechanisms act slowly, even when your economy is bleeding to death. Well, since your output (GDP) is clearly below potential output, here's what's happening: the rate of your inflation will continue to drop (disinflation), and, more likely than not, drop down to deflation. As that continues, it becomes increasingly more attractive to just hold on to your money, rather than investing it, even though interest rates are at the zero bound. Actually, if you pay the smallest amount of attention, you'll notice that's what's happening now.

The FED has been buying and will buy more government bonds/debt, in other words, it has been injecting liquidity (money) into the system. The stock market has been rising at a very nice pace and profits have been marvelous. However, the story is another for unemployment. Only in October did unemployment finally go down, after five months of going up, but the rate hasn't been very far from 9.6% for over a year. That's because, from one side, small businesses can't hire, because they have trouble selling (remember, demand shock); from another, enterprises don't want to invest, because the long term expectations for inflation are very low (or negative), so they are better off not investing. And if unemployment doesn't go down one way or another, yes, your decade is a lost one.

Naturally, it comes that the most efficient way to save your economy's arse - that's all your arses - is to stuff its body with some vitamin G; since vitamins X, C and I - especially I - aren't working.

Taking your points now:
1) If you search your desk, I'm sure you'll find "shovel ready projects". If can't find them, do me a favour, and stop cancelling more of those.
2) Most of the jobs created directly are temporary. Those connected to public investment obviously create permanent jobs given they require maintenance. Jobs created indirectly, tend to stick around and find their way into the market as they were. Plus, there's more regarding expectations and investment. Tax cuts are a failed policy in a liquidity trap. Allowing agents to keep money they won't use sure sounds productive.
3) You are worried about that? What news channel do you follow? Fox? What chance is there of a crowding out? In all likelihood, there'll be crowding in. If, for some incredible reason there's crowding out, it'll be compensated by the FED's quantitative easing.


How the money is best spent... I'm not all that interested. I do know that it needs to be spent. I can go with the no more roads policy, though. That only reflects lack of imagination. Try reaching Mars by 2015. Reduce the average payment time; that will push some liquidity into businesses.

Nice response L, good points on #3. The fed's easing will positively affect crowding, and I'm not concerned that much about private loan demand in the short term. However, the high debt levels along with all the recent legislation are creating a very uncertain environment, which discourages investment. I am expecting an inflationary environment here in the US next year especially food and oil, not a deflationary one, so we differ on that. It will be interesting to see how things pan out.

I can't believe you guys aren't talkin' train wreck lol

Surly with all this knowledge you are aware that the markets on Wall St. are artifically inflated.

I can think of several train wrecks to discuss. Take your pick:

1) Fannie Mae / Congress
2) Federal Reserve policy
3) Government employee unions / pensions

BTW - turn on your spell check

We have spell check??? YES!!

Now how to turn it on...

It's the flouride I'm sure. I waz a bitter spiller in therd grad.

I really was, third grader reading at college level and the spelling was there as a kid too... it's been lost to "better life through chemistry".

I see it now, 'artificially' right? That's a typo Thank you

Wait... where is it?

I don't have such confidence in the predictive power of macroeconomics, based on past performance. It's a complex system and there are important factors that are difficult to quantify, and always new factors arising.

I'm wary of the suggestion that it is obvious to anyone that additional government spending, in the US at present, will improve the economy.

One can list examples of situations where additional government spending clearly did not help a country's economy. One could then argue how those situations differed in important ways from our current one. If one gives examples of successful stimuli, one could still argue that those situations differed in important ways from the current one. In fact, the situation is always different.

Team Keynes vs Team Hayek

http://econstories.tv/2011/04/28/fight-of-the-century-music-video/