Obama's Change (Stimulus) Is More of the Same

Discussion in 'Economy' started by Kevin_Kennedy, Nov 8, 2008.

  1. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    Obama's change (stimulus) is more of the same
    By Michael S. Rozeff

    Obama's stimulus package is more of the same failed Keynesianism. His thinking is what needs to change.

    Later, not sooner, main stream economists (MSE), who are Keynesians, and main stream economic journalists (MSEJ), who are also Keynesians, will realize that debt-financed economic stimulus is counter-productive and that it diverts scarce capital to unproductive uses.

    The MSE are bloody idiots. Peter Hooper, chief economist at Deutsche Bank Securities, wants government to spend another 3% of GDP. Bernanke wants a new stimulus package that "should be significant."

    A minarchist government -- the entire operation at all levels -- should be 10% or less of national income, not 40%. And the idea of adding 3% should be laughed out of court. The $700 billion bailout is 4.7% of GDP alone! We have come to a position of social insanity.

    LewRockwell.com Blog: Obama's change (stimulus) is more of the same
     
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  2. Paulie
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    Paulie Platinum Member

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    He wants more money for food stamps. Yeah, that's what this fat ass country needs right now. More FOOD. :rolleyes:
     
  3. gonegolfin
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    gonegolfin Member

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    Precisely ... it crowds out legitimate economic investment as it competes for finite loanable funds.

    I heard an interview with Bill Gross a couple of weeks ago. He claimed that more spending was needed to pull out of this mess. He also added (which almost made be choke) that the one negative he saw in the economy was that there were signs that people were beginning to save instead of spend. Incredible.

    Brian
     
  4. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    Those greedy hoarders...

    If he thinks saving is a bad thing I suggest he read a little Rothbard.
     
  5. Diuretic
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    Diuretic Permanently confused

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    It seems strange to suggest that the very same economic philosophy which caused this mess should be used to clear it up. Somehow I don't think the fight fire with fire metaphor is going to work.

    But this whole global crisis shouldn't be treated as a political football. For mine a full-throated Keynesian approach is the way to treat it. Governments that crap their pants and do nothing but cut back on expenditure are going to ruin their economies. Given the US has the largest economy on Earth it would be a disaster for all of us if the Obama administration and Congress were to take that path.

    There's a good analysis in today's Melbourne Age by Ross Gittins, he explains it - from an Australian perspective naturally - extremely well.

    The Keynesian way returns - as we knew it would | theage.com.au

    More at the link, it's an easy but interesting read.
     
  6. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    These two statements seem to be contradictory, unless I'm mistaken as to what you're talking about in the beginning.
     
  7. Diuretic
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    Diuretic Permanently confused

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    I should have been more clear I agree.

    Opening statement - deregulation caused this mess.
    Main point - a Keynesian approach together with proper regulation will clean it up.

    But if I can ask a question. Why Rothbard?
     
  8. BaronVonBigmeat
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    BaronVonBigmeat Senior Member

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    Government policy, and Federal Reserve policy in particular, are responsible for this mess. And who are the biggest critics of the fed? Why none other than "Austrian" economists (ie Rothbard), which is largely what lewrockwell.com is devoted to. They saw the danger in what the fed was doing way back in 2002, and predicted the coming crash. Their advice has not been followed since 1921, when the government did nothing about the depression, which quickly disappeared.

    The Keynesian idea of deficit spending during recessions and running surpluses during boom times is foolish because for starters, spending is controlled by politicians, and they will not cut spending during boom times as they are supposed to, it's all deficits all the time. Total government spending simply does not shrink, at least not anymore.

    Secondly, expecting government to "create jobs" is somewhat like...arguing against the 2nd law of thermodynamics. What I mean is this: imagine that you have a house, and it's too hot for a few days in the summer. You don't want to buy an air conditioner just for a couple weeks in August. So, you leave you refrigerator door open to cool things down. Hey, it creates 1000 BTU's of cooling, right?

    No, of course not. It will indeed create 1000 BTU's of cooling, but it will also create say...1500 BTU's of heating, from the motor and condenser. The net result is, your house is hotter and you've wasted money.

    Likewise, government stimulus spending can indeed create 1000 jobs for example. But the taxes to do so will kill 1500 more jobs. Unfortunately, it's hard to make an explicit list of which jobs were killed or which businesses folded up because of increased taxes, so people assume they don't exist, or that their demise was inevitable. But people do see the 1000 government jobs created, and you *can* make an explicit list of new government jobs, so we all pat ourselves on the back and think that there was no cost.

    Keynesian spending didn't bring Japan out of it's 1991 recession for over a decade, in fact I don't think they ever really got out (?). And they had a whopping big dose of a textbook case of Keynesian spending. America tried the same thing starting in 1932, and the depression didn't truly end until after WWII, when government spending fell $98.4 billion in 1945 to $33 billion in 1948.
     
    Last edited: Nov 8, 2008
  9. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    Well I'm not going to argue with you, because we've been down that road before and it doesn't lead anywhere. But for the record, I disagree. ;)

    I mentioned Rothbard because I just recently re-read one of his books, What Has Government Done To Our Money?, and he spoke on why saving isn't harmful to the economy as many economists would have us believe. So basically he was fresh on my mind and I just threw his name out there.
     
  10. xsited1
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