The problem is not spending ENOUGH!

[ShackledNation]

If the fed will print me 50K I promise to spend it in America on American products. I swear I will.

And your spending will cause prices to rise, lowering the standard of living for everyone who did not get newly printed money. So in other words, you are indirectly stealing from everyone else.

So------50K is chump change compared to what the Fed printed for the richest people in the world.

And their spending will cause prices to rise, lowering the standard of living for everyone who did not get newly printed money. So in other words, they are indirectly stealing from everyone else.

 

[Sundial]

@sundial

Sorry limitations of phone response.

I didn't suggest giving money to anyone. Your agenda is showing by using that language. That you don't understand the inherent difference between forgoing revenue and spending money might explain why we are where we currently find ourselves. Apparently this lack of understanding is broadly shared across your side of the debate.

Stimulating long term r&d efforts means more jobs. Targeting other similar incentives will similarly mean more good paying jobs. More of those kind of jobs support more burger flippers or other service jobs. All that means more revenue to treasury.

Are you starting to get it yet?

You didn't answer the question: How does giving more money to big corporations get them to spend money, when they're already sitting on $2 trillion in cash?

Would it not be more effective to give the money to ordinary Americans? Especially when so many are out of work?

Ordinary Americans aren't spending money either, they are saving it, as they should be.

Ordinary Americans aren't spending because they don't have money. Corporations aren't spending because there's no demand for their products. There's no demand for their products because ordinary Americans don't have money.

 

[ShackledNation]

You didn't answer the question: How does giving more money to big corporations get them to spend money, when they're already sitting on $2 trillion in cash?

Would it not be more effective to give the money to ordinary Americans? Especially when so many are out of work?

Ordinary Americans aren't spending money either, they are saving it, as they should be.

Ordinary Americans aren't spending because they don't have money. Corporations aren't spending because there's no demand for their products. There's no demand for their products because ordinary Americans don't have money.

And ordinary Americans don't have money because many are out of work. Many are out of work because they were mal-employed in sectors of the economy experiencing an unsustainable boom. There was an unsustainable boom because the Federal Reserve created money and kept interest rates low to fuel it.

Spending shifts the structure of production to focus on consumer goods and lower order goods. Investment and saving shifts the structure of production to focus on capital and higher order goods. During the boom, people were spending a lot, meaning they desired consumer goods, but businesses were focusing heavily on higher order capital goods. Why? Interest rates were kept artificially low, creating the illusion of high savings, leading to growth built on sand and mal-investment.

The structure of capital is complicated. I suggest reading up on the Hayekian triangle.

 

[Sundial]

I did answer it. In the part where I said, "I didn't suggest giving money to anyone."

There's no difference between reducing Exxon's taxes by $1 billion and sending them a check for $1 billion.

That means corporations too. Directly to your question though. If the government gives you a dollar, you must answer the following questions:

a. Where did it get the dollar it's giving you?
Governments don't make anything and thus have no money of their own. That means they got it through some form or taxation (corp or personal likely).

The government creates money by spending it into the economy. The government creates demand for dollars through the tax code. When demand for dollars fades, the government must increase taxes. When demand for dollars grows, the government must spend more in order to meet the demand. If the government fails to tax enough, inflation is the result. If the government fails to spend enough, the result is unemployment. Unemployment is the problem now, so the government should be spending more.

The claim that the government "doesn't make anything" is preposterous. The government makes roads, satellites, laws, marines and money itself. It also provides services such as security, personal freedom, and the administration of justice. The free market would be impossible without government, as would the country itself.

b. How much did it cost the government to first collect the tax and then figure out that they needed to pay it to and finally to actually pay it to you?
The costs associated with providing money to individuals unless done through things like tax cuts, is usually excessive.

The administrative costs of Social Security and Medicare - the largest social welfare programs we have - are 0.6% and 3.3% respectively. (The private sector charges 2%-3% and 15%+, by comparison.)


c. Ultimately, you are not going to provide one person with a job with all the money government spends on you. As the Democrats are finding out, even a weak payroll tax holiday for employees doesn't do much more than maintain the status quo.

For businesses to start spending money, government needs to create regulatory certainty.

For businesses to start spending money, they have to see demand for their products. Where there's demand, businesses will increase production. "Regulatory uncertainty" is nonsense.

Currently, there is so much regulatory uncertainty that businesses do not have any understanding of what their future costs will be. Add to that an administration filled with people that love regulation and are constantly coming up with new ones and you have a business community that is paralyzed by the current regulatory environment, known regulations that haven't hit yet and unknown regulation that they fear may come at any time.

It will help when this situation no longer exists, but people may not want to wait around for business to naturally unwind after the being this pent up. To spur it, you would provide breaks as I mentioned in my previous post. That gets business to spend more (in the form of hiring and R&D) than they would naturally do.

Again, if companies aren't spending the money they have, why would giving them more money make a difference?

The will spend, when and only when, there's demand for their products.

Why should we forgo revenue from businesses? Because the result, more people hired quicker and the future benefit, maintaining US industry's technological advantage, is deemed by government to be of more importance than a few additional nickels it could squeeze out of business if it didn't. Basically, the same reason we have the mortgage interest deduction for individuals.

No matter how much money you give corporations, they're not going to spend money to increase production unless or until there's enough demand to sell the additional products.

 

[DontBeStupid]

Guess big spending is not the answer after all.

I love it when I see people claim they know more than Nobel Prize Winners.

You should read Krugman's blog. If you did, you would see Krugman has MAJOR problems with the way the stimulus was handled, and the size of it being only one part. For example, 1/3 of the stim was tax cuts, which are the single worst way to stimulate the economy. Also, 1/3 was aid to states, states which then cut spending anyway negating the effect. The only real, true Keynes stimulus was the 1/3 spent on projects over 2 years. Projects we all know were not as shovel ready as was claimed.

So in the end, the only stimulus we had was about $262B over 2 years, and that won't do jack!

You guys complaining about it and saying it proves Keynes wrong is like saying "We threw a bucket of water on that house fire and nothing happened. Clearly water was the wrong choice."

 

[ShackledNation]

Guess big spending is not the answer after all.

I love it when I see people claim they know more than Nobel Prize Winners.

Friedrich Hayek is a noble prize winner. I can assure you he knows far more than Paul Krugman or John Maynard Keynes.

 

[DontBeStupid]

Guess big spending is not the answer after all.

I love it when I see people claim they know more than Nobel Prize Winners.

Friedrich Hayek is a noble prize winner. I can assure you he knows far more than Paul Krugman or John Maynard Keynes.

Interesting that I don't see his name in your original post. Did you quote his work and forget to cite him?

Either way, since we are in a liquidity trap, something I don't think occurred prior to the 90s, please explain how Hayek could know more about that than Krugman, what with Hayek dying in '92 and all.

 

[PLYMCO_PILGRIM]

Or so says Paul Krugman.

Maybe we should look at other countries in this recession to see how they have fared and how much they have spent.

How about we look at Germany. From a balanced budget during 2007–2008, Germany has been running a deficit of only 3 percent of GDP during these tough times. So, with only modest stimulus compared to our deficit of 11 percent of GDP, what do you think has been happening to unemployment in that country? Keynesians would predict that it is worse in Germany than in the United States. If more spending really is the answer, clearly Germany is not spending enough.

Both the United States and Germany had unemployment rates of about 8 percent at the beginning of 2009. Here, in the United States, the unemployment rate quickly rose up to a peak of 10 percent, and has remained at 9 percent ever since. Over in Germany, the unemployment rate hardly rose at all, and is now down to 7 percent.
Keynes and Space Aliens - Clifford F. Thies - Mises Daily

Who spent a lot? Greece. Hmm.

Guess big spending is not the answer after all.

More government spending, as you show, will NOT SOLVE any economic problems but instead create more.

 

[ShackledNation]

I love it when I see people claim they know more than Nobel Prize Winners.

Friedrich Hayek is a noble prize winner. I can assure you he knows far more than Paul Krugman or John Maynard Keynes.

Interesting that I don't see his name in your original post. Did you quote his work and forget to cite him?

Either way, since we are in a liquidity trap, something I don't think occurred prior to the 90s, please explain how Hayek could know more about that than Krugman, what with Hayek dying in '92 and all.

What a joke response. I don't need you to quote Keynes or Krugman to know where you are coming from when you talk about liquidity traps. I am using his ideas, and your ignorance of them does not make me wrong. The fact your beloved Krugman has a Nobel prize does not make him omniscient.

The point is that Germany DID NOT engage in big spending, and in fact engaged in less spending than the US government, and has had a better recovery with less unemployment. If Krugman was correct, Germany should not have recovered as well as it has. It should be doing worse for it has spent less. Yet it is doing better. That is the point that flew over your head faster than a commercial jet.

 

[Oldstyle]

Guess big spending is not the answer after all.

I love it when I see people claim they know more than Nobel Prize Winners.

You should read Krugman's blog. If you did, you would see Krugman has MAJOR problems with the way the stimulus was handled, and the size of it being only one part. For example, 1/3 of the stim was tax cuts, which are the single worst way to stimulate the economy. Also, 1/3 was aid to states, states which then cut spending anyway negating the effect. The only real, true Keynes stimulus was the 1/3 spent on projects over 2 years. Projects we all know were not as shovel ready as was claimed.

So in the end, the only stimulus we had was about $262B over 2 years, and that won't do jack!

You guys complaining about it and saying it proves Keynes wrong is like saying "We threw a bucket of water on that house fire and nothing happened. Clearly water was the wrong choice."

So if the projects weren't shovel ready then...what makes you think they'll be shovel ready now? Go ahead and do your "stimulus" with infrastructure spending. Just be very aware that money won't hit the economy until years from now. Since inaction by this Administration has left millions of people out of work for years, I'm not sure they can hold out that long.

And since 262 billion won't do "jack" according to you then I guess you're admitting that Obama's new solution for job creation won't do "jack" as well because he's going to have a hard time getting that much this time around.

So why doesn't Barack the Magnificent try something different? Hey, here's an idea! How about if he stops bashing businesses and corporations, blaming them for not investing in America, and instead goes on TV and says that he's going to work with the Private Sector instead of against it. No more boycotts on drilling for oil. No more lawsuits by the DOJ against corporations trying to build new factories in right to work States. No more letting the EPA impose new standards on business without Congressional approval. No more appointing Czars to regulate how much money executives in the Private Sector can make. No more threats of Cap & Trade. No more attempts to push Card Check legislation through. No more calls for higher taxes on people making $200,000 a year. No more calls for $6.00 a gallon gasoline. No more wasting money on pie in the sky "green projects".

How about if we try doing THAT...and see if we can't get some of that money sitting on the sidelines back into our economy?

Or we can keep right on doing the same silly shit we've done for the past three years and hope it works out.

 

[BoycottTheday]

A large increase in spending would be great as long as IT'S NOT GOVERNMENT SPENDING.

Maybe if we knew where the money went, we could figure out why it dint work.

 

[Tech_Esq]

Sundial, there's a great quote function on this site. You should use it. At this point the post is so mucked up I'm not going to bother fixing it.

Your contention that forgoing revenue is not different than paying out money demonstrates exactly how much you don't understand the topic. I think we can stop there. Everything else you say rests on this faulty understanding.

 

[DontBeStupid]

Friedrich Hayek is a noble prize winner. I can assure you he knows far more than Paul Krugman or John Maynard Keynes.

Interesting that I don't see his name in your original post. Did you quote his work and forget to cite him?

Either way, since we are in a liquidity trap, something I don't think occurred prior to the 90s, please explain how Hayek could know more about that than Krugman, what with Hayek dying in '92 and all.

What a joke response. I don't need you to quote Keynes or Krugman to know where you are coming from when you talk about liquidity traps. I am using his ideas, and your ignorance of them does not make me wrong. The fact your beloved Krugman has a Nobel prize does not make him omniscient.

The point is that Germany DID NOT engage in big spending, and in fact engaged in less spending than the US government, and has had a better recovery with less unemployment. If Krugman was correct, Germany should not have recovered as well as it has. It should be doing worse for it has spent less. Yet it is doing better. That is the point that flew over your head faster than a commercial jet.

Ah, I see I was not specific enough for you. Ok then.

The stimulus plan the Dems passed contain roughly $262B in spending over 2 years on actual job projects. Or roughly 1.8% of GDP. Germany spent 3.4% on stimulus, so right there, Germany spent more and spent smarter.

Additionally, what is the state of the German housing market? Did they have as big of a bubble as we did? Doubtful. Which means they did not get hit as hard as we did. Also, German politicians apparently are able to come together and agree on courses of action for their country, something the TPers and GOP are 100% against.

The point is, you are using one item to make your claim, and you're not even using it correctly. Then you talk about someone you don't even mention in your post, and suddenly that is supposed to shoot down everything Keynes talked about and everything Krugman talks about. Talks, as in currently, as in still alive and reacting to the events of today.

Your sauce is weak my friend.

 

[ShackledNation]

Interesting that I don't see his name in your original post. Did you quote his work and forget to cite him?

Either way, since we are in a liquidity trap, something I don't think occurred prior to the 90s, please explain how Hayek could know more about that than Krugman, what with Hayek dying in '92 and all.

What a joke response. I don't need you to quote Keynes or Krugman to know where you are coming from when you talk about liquidity traps. I am using his ideas, and your ignorance of them does not make me wrong. The fact your beloved Krugman has a Nobel prize does not make him omniscient.

The point is that Germany DID NOT engage in big spending, and in fact engaged in less spending than the US government, and has had a better recovery with less unemployment. If Krugman was correct, Germany should not have recovered as well as it has. It should be doing worse for it has spent less. Yet it is doing better. That is the point that flew over your head faster than a commercial jet.

Ah, I see I was not specific enough for you. Ok then.

The stimulus plan the Dems passed contain roughly $262B in spending over 2 years on actual job projects. Or roughly 1.8% of GDP. Germany spent 3.4% on stimulus, so right there, Germany spent more and spent smarter.

Additionally, what is the state of the German housing market? Did they have as big of a bubble as we did? Doubtful. Which means they did not get hit as hard as we did. Also, German politicians apparently are able to come together and agree on courses of action for their country, something the TPers and GOP are 100% against.

The point is, you are using one item to make your claim, and you're not even using it correctly. Then you talk about someone you don't even mention in your post, and suddenly that is supposed to shoot down everything Keynes talked about and everything Krugman talks about. Talks, as in currently, as in still alive and reacting to the events of today.

Your sauce is weak my friend.

Sources please. There are plenty of people alive talking from the perspective of Hayek and the Austrian school.

As for your assumptions about Germany, the Germany economy experience more negative growth than the United States did. So your assumption that is was not "hit as hard" is simply not true.
source

Furthermore, you criticize the US for including tax cuts in the Stimulus, and that therefore Germany was better. Did you even question how many tax cuts were in the German stimulus? Clearly not.
The proportion of tax cuts to spending in the Germany stimulus was about twice that of the U.S. stimulus. And their entire stimulus bill including tax cuts was less than the amount you claim was spent on Keynesian projects in the US stimulus.
http://www.usnews.com/opinion/blogs...why-germanys-stimulus-works-and-obamas-doesnt

You are just making things up and arguing based on false assumptions. You call my argument weak sauce? Please. Your argument has no sauce. It is bland and tasteless.

 

[shintao]

Or so says Paul Krugman.

Maybe we should look at other countries in this recession to see how they have fared and how much they have spent.

How about we look at Germany. From a balanced budget during 2007–2008, Germany has been running a deficit of only 3 percent of GDP during these tough times. So, with only modest stimulus compared to our deficit of 11 percent of GDP, what do you think has been happening to unemployment in that country? Keynesians would predict that it is worse in Germany than in the United States. If more spending really is the answer, clearly Germany is not spending enough.

Both the United States and Germany had unemployment rates of about 8 percent at the beginning of 2009. Here, in the United States, the unemployment rate quickly rose up to a peak of 10 percent, and has remained at 9 percent ever since. Over in Germany, the unemployment rate hardly rose at all, and is now down to 7 percent.
Keynes and Space Aliens - Clifford F. Thies - Mises Daily

Who spent a lot? Greece. Hmm.

Guess big spending is not the answer after all.

You are correct. WHOM you spend it on is the answer. Logic should tell you if I give one American a trillion dollars, he will not stimulate the economy like dividing the trillion among 300 million Americans to spend loaclly in their own areas. Yet, that is basically what we did.

 

[shintao]

A large increase in spending would be great as long as IT'S NOT GOVERNMENT SPENDING.

Maybe if we knew where the money went, we could figure out why it dint work.

Wall Street Aristocracy Got $1.2 Trillion in Fed’s Secret Loans

 

[DontBeStupid]

the Germany economy experience more negative growth than the United States did. So your assumption that is was not "hit as hard" is simply not true.

I talk about housing bubbles and you talk about GDP? Not the same.

Honestly, look at German housing prices now and then. You will see they were not hit as hard by the housing bubble collapse as we were. This is fact. German housing prices started climbing back up a while ago.

Germany Price History-Germany’s house prices up on strong economy, rising employment | Global Property Guide

Google any combination of German and Housing and Bubble and you will see tons of articles about this very subject. It basically crushes anything else you say after that, because you can't really compare the German situation with the U.S. situation, because they weren't the same.

 

[Sundial]

Ordinary Americans aren't spending money either, they are saving it, as they should be.

If the fed will print me 50K I promise to spend it in America on American products. I swear I will.

And your spending will cause prices to rise, lowering the standard of living for everyone who did not get newly printed money. So in other words, you are indirectly stealing from everyone else.

Here's a chart showing Federal Reserve base money:

Here's a chart showing the inflation rate:

If there were a direct relationship between the money supply and inflation rate these charts would have something to do with each other. Austrians and Monetarists predict there should be such a relationship. Why isn't there?

 

[ShackledNation]

the Germany economy experience more negative growth than the United States did. So your assumption that is was not "hit as hard" is simply not true.

I talk about housing bubbles and you talk about GDP? Not the same.

Honestly, look at German housing prices now and then. You will see they were not hit as hard by the housing bubble collapse as we were. This is fact. German housing prices started climbing back up a while ago.

Germany Price History-Germany’s house prices up on strong economy, rising employment | Global Property Guide

Google any combination of German and Housing and Bubble and you will see tons of articles about this very subject. It basically crushes anything else you say after that, because you can't really compare the German situation with the U.S. situation, because they weren't the same.

No, I talk about unemployment and general economic conditions and you talk about housing. I never mentioned the housing bubble once. I am talking about economic conditions as a whole, including GDP. The fact is that the recession for whatever reason hit Germany quite hard. It experienced worse economic conditions than the US. It focused on austerity measures and spending less, and recovered faster. It is quite an anomaly to a Keynesian, so every excuse is made, even outright denial of the facts.

 

[DontBeStupid]

I never mentioned the housing bubble once.