Results In: Demand Stimulus is a Failure

[The Rabbi]

Writiing in today's WSJ, Alan Reynolds shows pretty conclusively that all the "demand side" stimulus of the Obama era failed. The recession ended. Job growth edged up. But based on all the money thrown at it, growth should have been in excess of other recoveries. It wasn't. It was worse. Over a trillion dollars wasted.
Alan Reynolds: Demand-Side Policy Gave Us the Big Economic Fizzle - WSJ.com

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By
Alan Reynolds
April 27, 2014 5:17 p.m. ET

Nearly five years since the recession ended in June 2009, economic policy discussions continue to focus on dubious short-term countercyclical measures to "stimulate demand." The Economic Report of the President for 2014 wastes an entire chapter rehashing the jobs supposedly "saved or created" by the 2009 fiscal stimulus and Federal Reserve easing. That analysis relies on notoriously inaccurate forecasting models to take credit for the entirely prosaic facts that (1) the last recession eventually ended just as all previous recessions did, and that (2) employment subsequently rose a bit.

This evades the key issue: Did fiscal or monetary stimulus actually "stimulate demand"?

In recent years the U.S. has experimented with demand-side stimulants on an unprecedented scale. Monetary stimulus involves pushing interest rates down to subsidize big borrowers (mainly governments and banks) at the expense of small savers (seniors). That was the reason the Fed shoved the federal-funds rate down to near zero. Even quadrupling the Fed's assets had no clear and significant impact on the sluggish growth of nominal GDP.

Fiscal stimulus involves big increases in the national debt, in the hope that taxpayers will not notice that national debt is their debt. Borrowing from Peter to pay Paul is thought to provide a net increase in their combined income or wealth, and therefore faster growth in total spending or "aggregate demand."

To find out if fiscal stimulus worked as advertised, we first need to separate deliberate increases in budget deficits from the portion caused by lost incomes and jobs. Once that separation is taken into account, we see that—according to Congressional Budget Office estimates of cyclically-adjusted budget deficits—the average increases were an unprecedented 5.7% of potential GDP from 2009 to 2012. No fiscal stimulus that large ever happened before in peacetime, and certainly not for four full years.

What happened? After such energetic demand-side stimulus, nominal GDP rose by only 3.8% a year from 2010 to 2013, and by 4% in the first quarter of 2014, compared with average GDP growth of 6.1% from 1983 to 2007. Ironically, the Economic Report of the President predicts faster growth of demand from now on—5% or more—but only after deep cuts in federal spending and euthanasia of quantitative easing. The promised stimulus from the previous fiscal and monetary binge remains undetectable—a big fizzle. Demand grew much faster (at a 6.1% pace) from 1998 to 2000, when the budget was in surplus and the Fed hiked the fed-funds rate to 6.5%

more at the source.

 

[boedicca]

Of course it failed. It's the country level equivalent of an individual maxing out credit cards and taking out a home equity loan...and thinking that is income. When, the bills come due, the "debt fueled lifestyle" collapses.

 

[The Rabbi]

You cannot take money from productive sources, give it to non productive ones, and expect great results. Democrat economic policies are the biggest failures in history, bar none.

 

[RDD_1210]

So let's see. As you've pointed out.

"The Recession Ended"

"Job growth improved"

That doesn't sound like failure. But if you keep moving the goal posts, you'll never be satisfied. Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

 

[Wry Catcher]

Simple thinking is so ... well, simple.

Nowhere in the 'thinking' of those above [RDD excepted] are all variables considered or even conceived of, yet they are so cocksure of themselves. Pitiful, but very typical of concrete thinkers and those of lesser wit (yeah, a bit ad 'hominel' but true and honest comments).

Projects completed and still in progress have and will have a long term positive effect on economic growth, much as the interstate highway system, the building of airports and light rail systems did in the 19th and 20th Centuries.

Austerity is not equivalent to fiscal responsibility, as the proverb, "for want of a nail", reminds those of us who actually think.

 

[The Rabbi]

So let's see. As you've pointed out.

"The Recession Ended"

"Job growth improved"

That doesn't sound like failure. But if you keep moving the goal posts, you'll never be satisfied. Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

Has there ever been a recession that did not end, and where employment went up afterwards? No, of course not.
Now go play in traffic.

 

[The Rabbi]

Simple thinking is so ... well, simple.

Nowhere in the 'thinking' of those above [RDD excepted] are all variables considered or even conceived of, yet they are so cocksure of themselves. Pitiful, but very typical of concrete thinkers and those of lesser wit (yeah, a bit ad 'hominel' but true and honest comments).

Projects completed and still in progress have and will have a long term positive effect on economic growth, much as the interstate highway system, the building of airports and light rail systems did in the 19th and 20th Centuries.

Austerity is not equivalent to fiscal responsibility, as the proverb, "for want of a nail", reminds those of us who actually think.

That was the vaguest, dumbest statement made on this yet. It's like you just know it can't be true but can't put your finger on why. So you deflect to generalities.
No, the analysis is correct: the stimulus and all the related programs failed to move the economy. Period.

 

[RDD_1210]

So let's see. As you've pointed out.

"The Recession Ended"

"Job growth improved"

That doesn't sound like failure. But if you keep moving the goal posts, you'll never be satisfied. Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

Has there ever been a recession that did not end, and where employment went up afterwards? No, of course not.
Now go play in traffic.

Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

 

[The Rabbi]

So let's see. As you've pointed out.

"The Recession Ended"

"Job growth improved"

That doesn't sound like failure. But if you keep moving the goal posts, you'll never be satisfied. Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

Has there ever been a recession that did not end, and where employment went up afterwards? No, of course not.
Now go play in traffic.

Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

Has there ever been a recession that did not end? No. Period.
Now go play in traffic.

 

[Billy000]

Writiing in today's WSJ, Alan Reynolds shows pretty conclusively that all the "demand side" stimulus of the Obama era failed. The recession ended. Job growth edged up. But based on all the money thrown at it, growth should have been in excess of other recoveries. It wasn't. It was worse. Over a trillion dollars wasted.
Alan Reynolds: Demand-Side Policy Gave Us the Big Economic Fizzle - WSJ.com

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By
Alan Reynolds
April 27, 2014 5:17 p.m. ET

Nearly five years since the recession ended in June 2009, economic policy discussions continue to focus on dubious short-term countercyclical measures to "stimulate demand." The Economic Report of the President for 2014 wastes an entire chapter rehashing the jobs supposedly "saved or created" by the 2009 fiscal stimulus and Federal Reserve easing. That analysis relies on notoriously inaccurate forecasting models to take credit for the entirely prosaic facts that (1) the last recession eventually ended just as all previous recessions did, and that (2) employment subsequently rose a bit.

This evades the key issue: Did fiscal or monetary stimulus actually "stimulate demand"?

In recent years the U.S. has experimented with demand-side stimulants on an unprecedented scale. Monetary stimulus involves pushing interest rates down to subsidize big borrowers (mainly governments and banks) at the expense of small savers (seniors). That was the reason the Fed shoved the federal-funds rate down to near zero. Even quadrupling the Fed's assets had no clear and significant impact on the sluggish growth of nominal GDP.

Fiscal stimulus involves big increases in the national debt, in the hope that taxpayers will not notice that national debt is their debt. Borrowing from Peter to pay Paul is thought to provide a net increase in their combined income or wealth, and therefore faster growth in total spending or "aggregate demand."

To find out if fiscal stimulus worked as advertised, we first need to separate deliberate increases in budget deficits from the portion caused by lost incomes and jobs. Once that separation is taken into account, we see that—according to Congressional Budget Office estimates of cyclically-adjusted budget deficits—the average increases were an unprecedented 5.7% of potential GDP from 2009 to 2012. No fiscal stimulus that large ever happened before in peacetime, and certainly not for four full years.

What happened? After such energetic demand-side stimulus, nominal GDP rose by only 3.8% a year from 2010 to 2013, and by 4% in the first quarter of 2014, compared with average GDP growth of 6.1% from 1983 to 2007. Ironically, the Economic Report of the President predicts faster growth of demand from now on—5% or more—but only after deep cuts in federal spending and euthanasia of quantitative easing. The promised stimulus from the previous fiscal and monetary binge remains undetectable—a big fizzle. Demand grew much faster (at a 6.1% pace) from 1998 to 2000, when the budget was in surplus and the Fed hiked the fed-funds rate to 6.5%

more at the source.

Man you are pathetic. A child who throws a tantrum when he can't win an argument.

I'm failing to see how this article explains why the stimulus failed. It only brings light the issue of federal spending in general. Not specific economic stimulators. It makes no mention of the actual gains cited by the CBO. The article is so obviously partisan it's laughable.


Obama's stimulus had two flaws:

1) it was not big enough. The economy lost 8 million jobs. The stimulus only created 2.5 million. That is why GDP did not budge much. It had a very little long term effect. However, it saved us from a Great Depression. We just need more bills like it.

2) it included huge tax cuts for the wealthy. Tax cuts across the board do not stimulate growth. Every dollar lost in revenue only creates .57 cents in growth. This made it less effective.


Extending EU which was a provision of the stimulus creates 1.71 in economic demand. Thus the dollar lost is replaced by growth.

19000 jobs per billion dollar stimulus is what resulted from the stimulus.

 

[Howey]

So let's see. As you've pointed out.

"The Recession Ended"

"Job growth improved"

That doesn't sound like failure. But if you keep moving the goal posts, you'll never be satisfied. Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

Bush's recession would have ended much sooner if infrastructure, training and job stimuli proposed had been approved.


But Congress was too concerned with making Obama look like a failure than passing bills.

 

[Zander]

The stimulus was a failure.....because it wasn't big enough!!

 

[Billy000]

LA Times

The Stimulus Absolutely, Positively Worked, No Doubt About It, Probably - Atlantic Mobile

http://www.newrepublic.com/blog/jonathan-cohn/94367/one-more-time-the-stimulus-worked

http://www.cbo.gov/sites/default/files/cbofiles/attachments/08-23-2012-RecoveryAct.pdf

https://nonprofitquarterly.org/poli...he-obama-stimulus-a-success-or-a-failure.html

 

[The Rabbi]

Writiing in today's WSJ, Alan Reynolds shows pretty conclusively that all the "demand side" stimulus of the Obama era failed. The recession ended. Job growth edged up. But based on all the money thrown at it, growth should have been in excess of other recoveries. It wasn't. It was worse. Over a trillion dollars wasted.
Alan Reynolds: Demand-Side Policy Gave Us the Big Economic Fizzle - WSJ.com

Email
Print

Save ↓ More
Comments
Facebook
Twitter
Google+
LinkedIn

smaller
Larger

By
Alan Reynolds
April 27, 2014 5:17 p.m. ET

Nearly five years since the recession ended in June 2009, economic policy discussions continue to focus on dubious short-term countercyclical measures to "stimulate demand." The Economic Report of the President for 2014 wastes an entire chapter rehashing the jobs supposedly "saved or created" by the 2009 fiscal stimulus and Federal Reserve easing. That analysis relies on notoriously inaccurate forecasting models to take credit for the entirely prosaic facts that (1) the last recession eventually ended just as all previous recessions did, and that (2) employment subsequently rose a bit.

This evades the key issue: Did fiscal or monetary stimulus actually "stimulate demand"?

In recent years the U.S. has experimented with demand-side stimulants on an unprecedented scale. Monetary stimulus involves pushing interest rates down to subsidize big borrowers (mainly governments and banks) at the expense of small savers (seniors). That was the reason the Fed shoved the federal-funds rate down to near zero. Even quadrupling the Fed's assets had no clear and significant impact on the sluggish growth of nominal GDP.

Fiscal stimulus involves big increases in the national debt, in the hope that taxpayers will not notice that national debt is their debt. Borrowing from Peter to pay Paul is thought to provide a net increase in their combined income or wealth, and therefore faster growth in total spending or "aggregate demand."

To find out if fiscal stimulus worked as advertised, we first need to separate deliberate increases in budget deficits from the portion caused by lost incomes and jobs. Once that separation is taken into account, we see that—according to Congressional Budget Office estimates of cyclically-adjusted budget deficits—the average increases were an unprecedented 5.7% of potential GDP from 2009 to 2012. No fiscal stimulus that large ever happened before in peacetime, and certainly not for four full years.

What happened? After such energetic demand-side stimulus, nominal GDP rose by only 3.8% a year from 2010 to 2013, and by 4% in the first quarter of 2014, compared with average GDP growth of 6.1% from 1983 to 2007. Ironically, the Economic Report of the President predicts faster growth of demand from now on—5% or more—but only after deep cuts in federal spending and euthanasia of quantitative easing. The promised stimulus from the previous fiscal and monetary binge remains undetectable—a big fizzle. Demand grew much faster (at a 6.1% pace) from 1998 to 2000, when the budget was in surplus and the Fed hiked the fed-funds rate to 6.5%

more at the source.

Man you are pathetic. A child who throws a tantrum when he can't win an argument.

I'm failing to see how this article explains why the stimulus failed. It only brings light the issue of federal spending in general. Not specific economic stimulators. It makes no mention of the actual gains cited by the CBO. The article is so obviously partisan it's laughable.


Obama's stimulus had two flaws:

1) it was not big enough. The economy lost 8 million jobs. The stimulus only created 2.5 million. That is why GDP did not budge much. It had a very little long term effect. However, it saved us from a Great Depression. We just need more bills like it.

2) it included huge tax cuts for the wealthy. Tax cuts across the board do not stimulate growth. Every dollar lost in revenue only creates .57 cents in growth. This made it less effective.


Extending EU which was a provision of the stimulus creates 1.71 in economic demand. Thus the dollar lost is replaced by growth.

19000 jobs per billion dollar stimulus is what resulted from the stimulus.

You failed to refute the article, which was very clear. Look at the unprecedented level of stimulus and compare that to actual results. The level was higher than ever before. The results were worse than ever before.
You cannot refute both those facts.

 

[The Rabbi]

So let's see. As you've pointed out.

"The Recession Ended"

"Job growth improved"

That doesn't sound like failure. But if you keep moving the goal posts, you'll never be satisfied. Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

Bush's recession would have ended much sooner if infrastructure, training and job stimuli proposed had been approved.


But Congress was too concerned with making Obama look like a failure than passing bills.

Congrress was completely controlled by Democrats for the first 2years. There was not a spending bill that was not approved.
Fail.

 

[The Rabbi]

LA Times

The Stimulus Absolutely, Positively Worked, No Doubt About It, Probably - Atlantic Mobile

CBO updates its economic projections, confirms earlier assessment that the Recovery Act created jobs | New Republic

http://www.cbo.gov/sites/default/files/cbofiles/attachments/08-23-2012-RecoveryAct.pdf

https://nonprofitquarterly.org/poli...he-obama-stimulus-a-success-or-a-failure.html

You throw the results of a Google search and think that somehow constitutes an argument?
/fail.

 

[RDD_1210]

Has there ever been a recession that did not end, and where employment went up afterwards? No, of course not.
Now go play in traffic.

Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

Has there ever been a recession that did not end? No. Period.
Now go play in traffic.

How about addressing what I actually said this time.

 

[The Rabbi]

Is your memory so short that you can't remember how close we were to a MUCH greater disaster at the end of 2007?

Has there ever been a recession that did not end? No. Period.
Now go play in traffic.

How about addressing what I actually said this time.

Because it's irrelevant.
There has never been a recession that did not end. Period.
This one ended after massive government spending and stimulus. ANd the results were no better-actually worse--than recessions that ended when the government did much less or nothing.

 

[RDD_1210]

Has there ever been a recession that did not end? No. Period.
Now go play in traffic.

How about addressing what I actually said this time.

Because it's irrelevant.
There has never been a recession that did not end. Period.
This one ended after massive government spending and stimulus. ANd the results were no better-actually worse--than recessions that ended when the government did much less or nothing.

Glad to know that the verge of financial disaster is irrelevant.

 

[Moonglow]

They should have taken the TARP and Stimulus monies and sent me a check, well all US citizens a check, we would have put it to better use....