I was told by Democrats that Unemployment Benefits would stimulate the Ecomony?

[Publius1787]

The economy is always being pushed up by positive forces and down by negative forces. Unemployment benefits are a positive force because it increases consumer spending. The net effect depends on the amount of negative forces pushing the economy down such as falling real estate prices.

So taking from the productive and giving to democrats create jobs?



But wait?


Real Unemployment is up

Poverty is up


Foreclosures are up




the economy is dying





but more welfare maybe will stir things up

Unemployment benefits puts money in the hands of people who will spend it which creates a need for more jobs. It may or may not counteract the forces pushing the economy down, but without the benefits consumer spending is less which makes things worse.

Those transfer payments do stimulate the economy just as private spending does. However, the money multiplyer is lower when the government does it, it destroys private investment, and businesses who need loans are crowded out by government borrowing as the money demanded increases the interest rates. Right now the Obama administration is trying to increase inflation as fast as possible to incentivise people to take out their money and spend it as the interest on many of their investments is bairley beating inflation. What this does is make everyone poorer and robs job creating industries of money to expand their businesses and create jobs. Furthermore, democrats keep forgetting that if there is no profit there are no wages and thus no jobs. They are trying to prop up failing unionised industries by monopolising stimulous money to favored unions and refusing to let the people spend their money naturaly and let the free market choose who fails. Worst of all it is official monetary policy that if we arent spending our money fast enough the government will spend it for us. How does any of this stimulate the economy? Shure the economy is stimulated when a welfare recipiant spends a dollar. But your not thinking about what the taxpayer who lost that dollar was going to do with it, the effects of borrowing that dollar, or the effect of printing that dollar. Those effects wipe the stimulous and transfer payments of any benefit we might gain as an economy and then some.

 

[Publius1787]

I am thinking where the country would be with millions more people living in abject poverty adding to the welfare rolls. However, it would solve one problem. The rest of the world would be taking advantage of the cheap American labor. Wasn't this the Republican plan?

No. What plan are you reading?

For more than 30 years Republicans have done everything they could to drive down the cost of labor by breaking the unions, voting against unemployment benefits, trying to abolish minimum wage, changing the wage and hour laws, and even trying to weaken child labor laws. There is no written plan. It's not needed. Every action the Republicans take is aimed at cutting the cost of labor.

It doesent take a liberal or conservative economist to tell you that wages must go down in a recession or the recession worsens.

 

[Publius1787]

Historically speaking we had more growth during periods of higher taxes.
I am speaking of real growth, not only stock market growth.

Historically speaking we had higher taxes in periouds of more growth.

 

[expat_panama]

Historically speaking we had more growth during periods of higher taxes. I am speaking of real growth, not only stock market growth.

Historically speaking we had higher taxes in periouds of more growth.

That may be true if you're talking about growth of government or partisan power. As for growth in economic activity then actual financial records have employment soaring after stock market recoveries coming after tax cuts.

fwiw the numbers are right here available to anyone interested.

 

[editec]

Like Tarp 2, Cash for Welfare, Shovel ready Welfare, Student loan takeovers, Car industry takeovers, Change for hope, hope for Change, change for changey hope. Poverty Up? Foreclosures Up? Food Stamps At A RECORD HIGH after 3 years of ObamaSocialism?




African American unemployment at 26%







Did Democrats lie?

Simplictic questions like your above deserve simplistic answers, I guess.

NO, Rodack, they didn't.

 

[expat_panama]

Historically speaking we had more growth during periods of higher taxes. I am speaking of real growth, not only stock market growth.

Historically speaking we had higher taxes in periouds of more growth.

That may be true if you're talking about growth of government or partisan power...

Actually you're both right saying more taxes were collected during booms than busts. Tax rate cuts start both but higher tax rates make lower tax revenue.

 

[Publius1787]

Historically speaking we had more growth during periods of higher taxes. I am speaking of real growth, not only stock market growth.

Historically speaking we had higher taxes in periouds of more growth.

That may be true if you're talking about growth of government or partisan power. As for growth in economic activity then actual financial records have employment soaring after stock market recoveries coming after tax cuts.

fwiw the numbers are right here available to anyone interested.

The roaring 20's happened after Coolage dramatically lowered taxes and the size of government.
The true boom after the great depression happened after JFK cut taxes.

I dont need to look it up. I have the chart of economic booms and busts hanging above my computer. Everyone knows that increased taxes leads to an equivilant decrease in spending with THE ADDED multiplyer subtraced from economic spending. This is especially true when the government is raising taxes to pay for programs that they are allready running a deficit for. Look up the money multiplyer and the marginal propencity to consume and how that effects economic growth when taxes are raised. Its a no brainer. After that, take in to effect of "crowding out" when government adds the economic stimulous as the money demanded skyrockets and job creating businesses get the short end of the stick.

 

[Rodack]

So Wait?

Unemployment stimulate the economy but just not this time


LOL

 

[uscitizen]

Stimulate does not mean resurect.

if the economy had not been stimulated some we may well have been in a full blowen depression by now.

 

[Rodack]

Putting Billions into the pockets of Democrat interests while calling it "stimulus" is stealing


Not stimulating


Sorry

 

[expat_panama]

...I dont need to look it up. I have the chart of economic booms and busts hanging above my computer. Everyone knows that increased taxes leads to an equivilant decrease in spending with...

Not everyone, only those of us who care to look.

Speaking of which, let me know if the chart you've got has a link you can share. fwiw here's what I came up with since my last post:

 

[Publius1787]

...I dont need to look it up. I have the chart of economic booms and busts hanging above my computer. Everyone knows that increased taxes leads to an equivilant decrease in spending with...

Not everyone, only those of us who care to look.

Speaking of which, let me know if the chart you've got has a link you can share. fwiw here's what I came up with since my last post:

I love it when people display their ignorance. Economic adjustments and changes are NEVER immediate. Also your nat taking in to effect other economic factors like the dot com bubble, the recession reagan inherited, and september 11th. However, JFK was spot on because there werent many other hard corps economic factors other than the tax cut. You also dont understand that unemployment lags behind economic improvements and a high unemployment rate is necessary during a recession to readjust the proper wage rates so that we can reach our natural economic equalibrium in responce to inflation measures taken to overcome a recession. But I'll bet that this is over your head huh? The bls is an excellent source though. I wouldent go with any other. I live on that website.

AE = MPC x (Y-T) + I + G + X - M

Equalibrium AE=Y

AE Aggrigate Expendature
MPC always less than 1
Y Real GDP
T taxes
I Investment
G Government Spending
X Exports
I Imports

Note: Crowding out due to govt borrowing is not measured in this model

Now take in to effect that the MPC is always a decemal less than 1 and multiply by T (taxes) you cannot possibly increase AE or Y by increasing taxes especially if you include crowding out of loans and whether those taxes are used to pay off debt or increase spending. Also note that the multiplyer for government is less than the multiplyer for the private market and what you have is a whole lot of government debt, more inefficient government spending if the higher taxes arent just there to pay off debt, and lower private sector spending. Not to mention uncertainty of how the higher taxes will affect cutomers, businesses, or yourself, etc etc etc and a whole host of other factors that I have absolutly no time or determination to go in to. Remember. The goal of a recession is to increase Y to Yp. Real GDP to Potential GDP. Good luck doing that by increasing taxes.

 

[Flopper]

Right now the Obama administration is trying to increase inflation as fast as possible to incentivise people to take out their money and spend it as the interest on many of their investments is bairley beating inflation.

So People are going to sell their investments and spend the money because of inflation. Where do you get this idea? Interest rates rise with inflation as do bonds and usually stocks and gold prices. Investors are not going to sell appreciating investments to buy depreciable asset and consumables because of inflation. It makes no sense.

 

[Publius1787]

So People are going to sell their investments and spend the money because of inflation. Where do you get this idea? Interest rates rise with inflation as do bonds and usually stocks and gold prices. Investors are not going to sell appreciating investments to buy depreciable asset and consumables because of inflation. It makes no sense.

Say inflation is 3% and the interst on a bond is 3.5 %. Whats the real interest on that bond? Of course, the answer is .5% . So as the inflation rate rises are you more or less likely to invest your money whether it be stocks, bonds, etc etc etc? The answer is of course, less. So people dont save their money because all of the interest rates are pushed down so low that the fed needs to result to quantitative easing (experimental never been done before) to squeez any more juice out of the economy which creats super inflation if done recklessly. This answeres the question of why are the interest rates for investment so low? Because the government wants you spending that money not investing it. But if you have less investment there is less expansion of businesses. So what businesses do? They borrow more. After all the interest rates are low. Thus money is created in the form of a loan and there is more inflation. If inflation is at 3% and you have a 5% interest rate on your loan you are only paying 2% interest. This incentivises borrowing by businesses who arent hireing because no one is consuming and they cant expand because investors are pulling their money out to make up for their loss in income during the recession. Dont think of investors as big shot wall street tycoons. most of the investors are people like you and me. A recession increases the supply of money demanded as people cash in their investments. Does this clear it up for you? No the interst rates on investments do not rise with inflation. This is on purpose. So that people pull their money out and spend it to help grow the economy and boost GDP. Thats unfortunantly why economics is a social science.

Theres much more to it but I will leave it at that. Anyone with a remote knowlege of economics knows that if inflation increases, investment decreases.

 

[rdean]

Like Tarp 2, Cash for Welfare, Shovel ready Welfare, Student loan takeovers, Car industry takeovers, Change for hope, hope for Change, change for changey hope. Poverty Up? Foreclosures Up? Food Stamps At A RECORD HIGH after 3 years of ObamaSocialism?




African American unemployment at 26%






Did Democrats lie?

From 2001 to 2008, Republicans, working with the Chamber of Commerce and China moved 2.4 million jobs to China.

So what is the "final" solution for those unemployed according to Republicans?

 

[Flopper]

Say inflation is 3% and the interst on a bond is 3.5 %. Whats the real interest on that bond? Of course, the answer is .5% . So as the inflation rate rises are you more or less likely to invest your money whether it be stocks, bonds, etc etc etc? The answer is of course, less. So people dont save their money because all of the interest rates are pushed down so low that the fed needs to result to quantitative easing (experimental never been done before) to squeez any more juice out of the economy which creats super inflation if done recklessly. This answeres the question of why are the interest rates for investment so low? Because the government wants you spending that money not investing it. But if you have less investment there is less expansion of businesses. So what businesses do? They borrow more. After all the interest rates are low. Thus money is created in the form of a loan and there is more inflation. If inflation is at 3% and you have a 5% interest rate on your loan you are only paying 2% interest. This incentivises borrowing by businesses who arent hireing because no one is consuming and they cant expand because investors are pulling their money out to make up for their loss in income during the recession. Dont think of investors as big shot wall street tycoons. most of the investors are people like you and me. A recession increases the supply of money demanded as people cash in their investments. Does this clear it up for you? No the interst rates on investments do not rise with inflation. This is on purpose. So that people pull their money out and spend it to help grow the economy and boost GDP. Thats unfortunantly why economics is a social science.

Theres much more to it but I will leave it at that. Anyone with a remote knowlege of economics knows that if inflation increases, investment decreases.

Your theory sounds reasonable but does not stand-up under real market conditions. Consider the period from 1975 to 1980. During this period we had the steepest rise in inflation rates since the 1920’s. Inflation rose from about 5.5% to 14%. Interest rates rose from 6% to 15%. And what happened to retail sales during this period? They were weaker than the preceding five years. Automotive sales fell resulting in plant shutdowns and layoffs. Unemployment rose gradually resulting in the recession of 1980.

During these years, money flowed from the stock market, which remained in a trading pattern to bonds, collectibles, and gold, which went from $180 to $500. The one place it didn't go was retail sales.

http://www.crestmontresearch.com/docs/i-rate-relationship.pdf
Historical Inflation data from 1914 to the present
Economic Indicators: Retail Sales Report
Dow Jones Industrial Average (DJIA) History

 

[editec]

You think this problem is all about the Dems, do you?

How unfortunate for our nation that your misinformed POV is so common.

 

[Warrior102]

If there were jobs created, there would be a low unemployment rate, yes?
Haven't seen that lately.

 

[Flopper]

If there were jobs created, there would be a low unemployment rate, yes?
Haven't seen that lately.

Increase in employment = job creation - job losses. Surely you understand this.

 

[Publius1787]

Your theory sounds reasonable but does not stand-up under real market conditions. Consider the period from 1975 to 1980. During this period we had the steepest rise in inflation rates since the 1920’s. Inflation rose from about 5.5% to 14%. Interest rates rose from 6% to 15%. And what happened to retail sales during this period? They were weaker than the preceding five years. Automotive sales fell resulting in plant shutdowns and layoffs. Unemployment rose gradually resulting in the recession of 1980.

During these years, money flowed from the stock market, which remained in a trading pattern to bonds, collectibles, and gold, which went from $180 to $500. The one place it didn't go was retail sales.

http://www.crestmontresearch.com/docs/i-rate-relationship.pdf
Historical Inflation data from 1914 to the present
Economic Indicators: Retail Sales Report
Dow Jones Industrial Average (DJIA) History

Wow. A Theory? Its not a theory. Its actually our monitary policy. That 1980's inflation you spoke of? Yes, thats what got us out of the Carter Recession. It could have killed us if they went to far. But they gambled and came out on top.
Futhermore, they took their money out of the volitile stock market to invest in SHORT TERM bonds. That way they could reinvest their money in a short amount of time while losing a minimal amout of their value due to inflation. However, people cashed in their long term bonds and savings to help themselves during the hard times of the recession. If you have no job or times are tight people result to spending their savings and investments. There is no arguing that the lower the return the lower the chances of people investing in that bond and the more of a chance that people will keep that money in banks or spend it. Especially in a recession when times are hard. This is the most basic of basic economics. There is not a single economist or economics professor will tell you that this is not our monetary policy. All college textbooks explain this process. The news papers talk about the fed doing this on a daily basis. Its not a theory. Its economic policy.