Krugman: When everyone spends less or deleverages you have depression...

[CrusaderFrank]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Of course, Krugman is right. Krugman always is right. An economy is spending. When the private sector doesn't, the public sector must.

Which is why North Korea has the world's largest economy

 

[Rshermr]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Of course, Krugman is right. Krugman always is right. An economy is spending. When the private sector doesn't, the public sector must.

Which is why North Korea has the world's largest economy

Jesus, Crusader. another Profound post from the right.

 

[ccravens]

Roosevelt had to begin the recovery with spending increases, bringing the unemployment down year by year. Stimulus spending worked then...

The right's stupidity spreads, enabled by a too-polite left | George Monbiot | Comment is free | The Guardian

If you're just going to re-write history, what's the use of even discussing issues with you?

No historian or economist (unless you consider Rachel Maddow an economist, which you probably do) worth their salt today claims that the New Deal "worked then" as you've stated.

You've swallowed WAY too much kool-aid to be of any use in an economic discussion.

 

[EdwardBaiamonte]

Of course, Krugman is right. Krugman always is right. An economy is spending. When the private sector doesn't, the public sector must.

Which is why North Korea has the world's largest economy

Jesus, Crusader. another Profound post from the right.

if its mistaken why be so afraid to say exactly how? What does you fear tell us.

Government spending creates bubbles and recessions or depressions.
How do you think FDR keep the Depression going for so long?

 

[EdwardBaiamonte]

Ed believes that we need an economic plan like that of hoover.

if you have evidence of this I'll pay you $10,000. Bet or hop away again with your liberal tail between your legs!!

Hoover Watched the unemployment rate move from 5% to over 20% while he reduced spending.

Here are the levels of federal government spending (from here, Series Y 457-465) between 1924 and 1934 in billions of dollars

1924 $2.9
1925 $2.9
1926 $2.9
1927 $2.9
1928 $3.0
1929 $3.1
1930 $3.3
1931 $3.6
1932 $4.7
1933 $4.6


See why we say a liberal will be stupid???? What other explanation is possible??

 

[Rozman]

So what is the plan?
Government TAKES more money from those that have.
Then what, just hands it over to those that don't.
Then they spend it all on products made in China,and Mexico and maybe even India.
And that money goes out of the country.

This is the big plan.

 

[onecut39]

Well what do you mean by not spending? Do you mean hoarding cash? Because few people do that. Even if they did, it would not affect production in any negative way.

If you don't spend, money is invested or saved in a bank. Both instances provide businesses more revenue options to expand.

If you put your money under a mattress, you are increasing the demand for money. This will increase the purchasing power of each dollar being spent, allowing it to obtain more. Prices will fall, including costs of production. So the level of production is not effected, it is just accomplished with fewer dollars of a higher purchasing power.

So if an economy is not producing, it has to do with a misallocation of resources that prevent successful production from taking place. Often this misallocation, if economy wide, is a result of monetary policy, such as price controls keeping the interest rate artificially low and massive money pumping into the economy. It completely distors the structure of capital, which is often ignored by Keynesian economists. That misallocation of resources was in housing with regards to the current problem.

Reduce that philosophy to its basics and it looks like "Boom and Bust".

Am I wrong?

 

[Widdekind]

Hoover Watched the unemployment rate move from 5% to over 20% while he reduced spending.

Here are the levels of federal government spending (from here, Series Y 457-465) between 1924 and 1934 in billions of dollars

are you certain about your numbers? According to:

Government Taxes and Revenue Chart: United States 1923-1934 - Federal State Local Data​

under Pres. Hoover, from 1929-1932, Federal tax revenues decreased, from $4.3B to $2.6B; whilst Federal expenditures increased, from $3.8B to $4.2B; turning a half-billion dollar surplus, into a billion-and-a-half dollar deficit. If so, then "Fiscal stimulus" actually occurred, under Pres. Hoover.

 

[EdwardBaiamonte]

Reduce that philosophy to its basics and it looks like "Boom and Bust".

Am I wrong?

wrong and stupid and liberal.

boom and bust is caused by liberal interference. People don't suddenly stop working and stop eating. Only government interference in markets can distort them so you have boom and bust cycles.

The current depression is a good example. The whole Federal government was organized to get people into homes the free market said they could not afford. Do you see the results????

 

[eflatminor]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Of course, Krugman is right. Krugman always is right. An economy is spending. When the private sector doesn't, the public sector must.

You've fallen victim to the fallacy of the broken window. Look it up.

Stated differently, government can't take money out of the economy, run it through a bureaucratic maze, and then call it "stimulus" when they dole some of that money out to failing organizations and people that don't work.

If that concept did work, I could rob the local grocery store of its till, keep a few dollars for my efforts and retirement, then call it "stimulus" when I give some of that money to a homeless guy who buys beer from the same grocery store.

Get your head out of Keynes' ass and read something!

 

[EdwardBaiamonte]

If that concept did work, I could rob the local grocery store of its till, keep a few dollars for my efforts and retirement, then call it "stimulus" when I give some of that money to a homeless guy who buys beer from the same grocery store.

well maybe the liberals are more diabolical then we know. They have mostly convinced the grocery store owner and the homeless guy to vote for them while they both are being harmed in obvious ways. The Democrats know how to stimulate votes it seems!

In the end I suppose its a simple case of pure ignorance winning out. Thats more normal than diabolical.

 

[KissMy]

Krugman is an idiot! - Famous Paul Krugman quotes from 2001 as he was begging the Fed to create the housing bubble.

- Die Zeit, Germany: (February 2001) - “During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn’t you lower interest rates?”

- New York Times: (May 2, 2001) - "I’ve always favored the let-bygones-be-bygones view over the crime-and-punishment view. That is, I’ve always believed that a speculative bubble need not lead to a recession, as long as interest rates are cut quickly enough to stimulate alternative investments. But I had to face the fact that speculative bubbles usually are followed by recessions. My excuse has been that this was because the policy makers moved too slowly — that central banks were typically too slow to cut interest rates in the face of a burst bubble, giving the downturn time to build up a lot of momentum. That was why I, like many others, was frustrated at the smallish cut at the last Federal Open Market Committee meeting: I was pretty sure that Alan Greenspan had the tools to prevent a disastrous recession, but worried that he might be getting behind the curve.

However, let’s give credit where credit is due: Mr. Greenspan has cut rates since then. And while some of us may have been urging him to move even faster, the Fed’s four interest-rate cuts since the slowdown became apparent represent an unusually aggressive response by historical standards. It’s still not clear that Mr. Greenspan has caught up with the curve — let’s have at least one more rate cut, please — but the interest-rate cuts do, cross your fingers, seem to be having an effect.

If we succeed in avoiding recession, this will mark a big win for let- bygones-be-bygones, and a big loss for crime-and-punishment. And that will be very good news not just for this business cycle, but for business cycles to come."

- CNN: (July 18, 2001) - “KRUGMAN: I think frankly it’s got to be — business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).

DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she — or I should say he and she, can they bring back this economy?

KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don’t know”

- CNN: (August 8th, 2001) - “KRUGMAN: I’m a little depressed. You know, inventories, probably that’s over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven’t fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It’s not a happy picture.”

- New York Times: (August 14, 2001) - “Consumers, who already have low savings and high debt, probably can’t contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery…. But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates — and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1…. Sooner or later, of course, investors will realize that 2001 isn’t 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.

- New York Times: (Sept. 14, 2001) - The broken-window fallacy by professor Paul Krugman after 9/11: "Ghastly as it may seem to say this, the terror attack — like the original day of infamy, which brought an end to the Great Depression — could do some economic good." He went on to note how rebuilding would stimulate the economy by business investment and job creation.

- New York Times: (October 7, 2001) - “Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.

In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package”

- New York Times: (Dec 28, 2001) - "The good news about the U.S. economy is that it fell into recession, but it didn’t fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed’s dramatic interest rate cuts helped keep housing strong even as business investment plunged.”

 

[Truthseeker420]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Everyone laughs knowing that artifical government spending will only create another artificial housing type bubble that eventually bursts causing even more need to deleverage and even more depression.

so you know nothing of Keynesian economics?

 

[kwc57]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Everyone laughs knowing that artifical government spending will only create another artificial housing type bubble that eventually bursts causing even more need to deleverage and even more depression.

Krugman is a highly educated moron.

 

[Truthseeker420]

Krugman is an idiot! - Famous Paul Krugman quotes from 2001 as he was begging the Fed to create the housing bubble.

- Die Zeit, Germany: (February 2001) - “During phases of weak growth there are always those who say that lower interest rates will not help. They overlook the fact that low interest rates act through several channels. For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn’t you lower interest rates?”

- New York Times: (May 2, 2001) - "I’ve always favored the let-bygones-be-bygones view over the crime-and-punishment view. That is, I’ve always believed that a speculative bubble need not lead to a recession, as long as interest rates are cut quickly enough to stimulate alternative investments. But I had to face the fact that speculative bubbles usually are followed by recessions. My excuse has been that this was because the policy makers moved too slowly — that central banks were typically too slow to cut interest rates in the face of a burst bubble, giving the downturn time to build up a lot of momentum. That was why I, like many others, was frustrated at the smallish cut at the last Federal Open Market Committee meeting: I was pretty sure that Alan Greenspan had the tools to prevent a disastrous recession, but worried that he might be getting behind the curve.

However, let’s give credit where credit is due: Mr. Greenspan has cut rates since then. And while some of us may have been urging him to move even faster, the Fed’s four interest-rate cuts since the slowdown became apparent represent an unusually aggressive response by historical standards. It’s still not clear that Mr. Greenspan has caught up with the curve — let’s have at least one more rate cut, please — but the interest-rate cuts do, cross your fingers, seem to be having an effect.

If we succeed in avoiding recession, this will mark a big win for let- bygones-be-bygones, and a big loss for crime-and-punishment. And that will be very good news not just for this business cycle, but for business cycles to come."

- CNN: (July 18, 2001) - “KRUGMAN: I think frankly it’s got to be — business investment is not going to be the driving force in this recovery. It has to come from things like housing, things that have not been (UNINTELLIGIBLE).

DOBBS: We see, Paul, housing at near record levels, we see automobile purchases near record levels. The consumer is still very much in this economy. Can he or she — or I should say he and she, can they bring back this economy?

KRUGMAN: Well, as far as the arithmetic goes, yes, it is possible. Will the Fed cut interest rates enough? Will long-term rates fall enough to get the consumer, get the housing sector there in time? We don’t know”

- CNN: (August 8th, 2001) - “KRUGMAN: I’m a little depressed. You know, inventories, probably that’s over, the inventory slump. But you look at the things that could drive a recovery, business investment, nothing happening. Housing, long-term rates haven’t fallen enough to produce a boom there. The trade balance is going to get worst before it gets better because the dollar is still very strong. It’s not a happy picture.”

- New York Times: (August 14, 2001) - “Consumers, who already have low savings and high debt, probably can’t contribute much. But housing, which is highly sensitive to interest rates, could help lead a recovery…. But there has been a peculiar disconnect between Fed policy and the financial variables that affect housing and trade. Housing demand depends on long-term rather than short-term interest rates — and though the Fed has cut short rates from 6.5 to 3.75 percent since the beginning of the year, the 10-year rate is slightly higher than it was on Jan. 1…. Sooner or later, of course, investors will realize that 2001 isn’t 1998. When they do, mortgage rates and the dollar will come way down, and the conditions for a recovery led by housing and exports will be in place.

- New York Times: (Sept. 14, 2001) - The broken-window fallacy by professor Paul Krugman after 9/11: "Ghastly as it may seem to say this, the terror attack — like the original day of infamy, which brought an end to the Great Depression — could do some economic good." He went on to note how rebuilding would stimulate the economy by business investment and job creation.

- New York Times: (October 7, 2001) - “Post-terror nerves aside, what mainly ails the U.S. economy is too much of a good thing. During the bubble years businesses overspent on capital equipment; the resulting overhang of excess capacity is a drag on investment, and hence a drag on the economy as a whole.

In time this overhang will be worked off. Meanwhile, economic policy should encourage other spending to offset the temporary slump in business investment. Low interest rates, which promote spending on housing and other durable goods, are the main answer. But it seems inevitable that there will also be a fiscal stimulus package”

- New York Times: (Dec 28, 2001) - "The good news about the U.S. economy is that it fell into recession, but it didn’t fall off a cliff. Most of the credit probably goes to the dogged optimism of American consumers, but the Fed’s dramatic interest rate cuts helped keep housing strong even as business investment plunged.”

Krugman had no way of knowing in 2001 of how irresponsible Bush administration and the Federal Reserve would be at the time when most respected economists were calling for fiscal restraint, especially when the Federal Reserve was so fast to slow down the economy under Clinton.

 

[EdwardBaiamonte]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Everyone laughs knowing that artifical government spending will only create another artificial housing type bubble that eventually bursts causing even more need to deleverage and even more depression.

so you know nothing of Keynesian economics?

the above is Keynesian economics. If not why be so afraid to explain why not. What does your fear tell you?

 

[Truthseeker420]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Everyone laughs knowing that artifical government spending will only create another artificial housing type bubble that eventually bursts causing even more need to deleverage and even more depression.

Krugman is a highly educated moron.

Why do you say that?

 

[EdwardBaiamonte]

Krugman had no way of knowing in 2001 of how irresponsible Bush administration and the Federal Reserve would be at the time when most respected economists were calling for fiscal restraint,

too stupid!! Krugman is a socialist, he is always calling for more government spending and lower interest rates no matter what!

 

[EdwardBaiamonte]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Everyone laughs knowing that artifical government spending will only create another artificial housing type bubble that eventually bursts causing even more need to deleverage and even more depression.

Krugman is a highly educated moron.

Why do you say that?

probably because he is a socialist

 

[Truthseeker420]

because one man's spending is another man's income.

Krugmans solution is for government stimulus spending to make up the lost spending.

Everyone laughs knowing that artifical government spending will only create another artificial housing type bubble that eventually bursts causing even more need to deleverage and even more depression.

so you know nothing of Keynesian economics?

the above is Keynesian economics. If not why be so afraid to explain why not. What does your fear tell you?

Keynesian economics espouses that during fast growth of an economy policy makers should practice fiscal restraint to prevent large "bubbles".