I don't buy it.
No More Spendulus ! ! ! ! ! ! ! ! !
No More Spendulus ! ! ! ! ! ! ! ! !
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The point is, yes, you actually could use more stimulus, because the other stimulus was not big enough. Furthermore, by far the most important stimulus is that to state and local governments.
The point is, yes, you actually could use more stimulus, because the other stimulus was not big enough. Furthermore, by far the most important stimulus is that to state and local governments.
What do you want when you invoke circular reasoning that cannot be objectively proven?
By definition isn't a stimulus supposed to generate a response? The proper response by state and local government should have been more reductions on programs and employees. This is not a failure of a stimulus, but a failure of government.
Oh, bunk.
That's the traditional fall back spin of Keynesian witch doctors, when all their Utopian technocrat plans don't pan out -- like they usually don't.
"Oh, our know-it-all central planning didn't work because we didn't do enough of it soon enough!"
No sale here, bub.
And why did all those people end up so screwed up?
Many by their own fault...
Also, largely because a bunch of know-it-all Keynesian central planners really don't know what the hell they're doing, let alone be they able to plan the lives of 300+ million people.
Now, we're supposed to expect that the arsonists can be trusted to put out the fire?
By definition isn't a stimulus supposed to generate a response? The proper response by state and local government should have been more reductions on programs and employees. This is not a failure of a stimulus, but a failure of government.
Well, that all depends. If your goal is to prolong the recession, then spending cuts would certainly be a proper answer. If you want to minimize the effects of a recession, basic economic theory would tell you that doing so would amplify the impact of the downturn.
The point of the stimulus is to make up for the underutilization of the factors of production produced by a lack of confidence in the economy. The $790 billion stimulus that got passed did not cover even half of the total loss in demand the economy was going to experience. It would've required something like 900 billion a year over two years to make up for the 10% of GDP that was lost, but of course after both Democrats and Republicans had been preaching about "balanced budgets" for so long the climate was ripe for people to get upset over this massive amount of spending.
This huge outcry is a little misplaced. The first thing is that debt is not entirely a bad thing always. Debt is an instrument. Like consumers, governments use debt to smooth consumption. Right now, that we are in a recession, it makes perfect economic sense for the government to run a large deficit (high spending, low taxes) for consumption-smoothing (and that is just basic macroeconomic theory). The flip side to that is that governments have to run surpluses (low spending, high taxes) during booms. This was the major policy mistake of the massive Bush deficits: it's not that Bush's policies created the recession (the Fed had been playing the leading role there independently), it's that he triggered a huge deficit (tax cuts and spending increases to fund his global wars) in the middle of a giant boom - THAT is what makes no sense. By the time this recession came and that administration ended, there wasn't really anything else to do but go further into deficit. In other words, the deficits that began emerging in the 2000s with the Bush policies limited the governments abilities to use its would-be surplus to counter the recession.
Another point is that surely massive and unlimited deficits can't go on forever, but the fact is that we're talking about a situation in which the US government ceases to be able to pay off its debt. This isn't going to happen in the foreseeable future, beginning with the fact that debt today is not historically that alarming (it's far below the peak burden as % of GDP, which was back in the early 1990s, or peak total debt-to-GDP ratios, which were MUCH larger than now, during WWII). The fact that "them darned forrrnerrsss" hold tons of US debt (especially China) is actually subsidizing the US ability to acquire more debt. None of the big holders have absolutely anything to gain (but a lot to lose) by a massive sell-off of US debt, China least of all.
The point is, yes, you actually could use more stimulus, because the other stimulus was not big enough. Furthermore, by far the most important stimulus is that to state and local governments.