Krugman's very very simple solution to end this depression

[Dante]

Right, another silly trick -- a troll restates what you have just said and then asks: "Are you really this stupid in real life?"

Because when I restate it is obvious you don't have the first fucking clue as to what you're talking about.

You are so pissed off because I know how to handle trolls. You can't argue the issues and go ad hominem, exposing yourself for what a troll you are.

 

[ilia25]

How much worse would it have been, gomer?

The unemployment would probably peak at 12-14% w/o Obama's stimulus, and stay there for long time.

 

[TakeAStepBack]

Would probably does not mean anything. I say it would have probablybeen about the same in outcome considering states just plugged deficit holes with the "shovel ready" money. However, this is not a fact but a mere opinion of what you think. And being that you actually believe cutting spending adds to deficits, I am not one to take your opinion with any measure of serious. You're more inept on economics than Krugman. And that is a task not easily met.

 

[Widdekind]

When government stimulus has a 100% Epic Fail record like it does in the USA (e.g. FDR, Obama) you have to wonder what stops people from learning from their epic failure

Fiscal stimulus recovered the economies of the US (WWII) and Japan (1990s). Fiscal stimulus can be good, in theory. Of course, "in practice" is what matters. Mis-spending money is always bad, and never generates (economically) good results. If the US Government does always mis-spend money; then every Fiscal stimulus would be "sabotaged" by such corruption. Not the fault of Fiscal stimulus, per se, however

All stimulus fails. Because the economy cannot absorb that kind of influx of money without wasting most of it. Any gov't program that pours huge amounts of money into anything results in waste and fraud. How much waste and fraud came in the Katrina clean-up? Tons. Even defense. It is riddled with waste and fraud because of the vast sums we spend there. Waste and fraud do not produce recovery. They only produce waste and fraud.

good "in theory" can be made bad "in practice" by corruption. Not the fault of Fiscal stimulus, per se

The government is not an entrepreneurial business. it is the legal structure of our constitution and laws.

a business is a big group of people working together. Except during civil wars, a country is a bigger group of people working together. As private businesses borrow for private investments (machines, factories), the "Public enterprise" could borrow for Public investments (basic education, infrastructure). Big, and bigger, groups of people borrowing today, building profitable investments tomorrow, and reaping the rewards the day after (as they pay back their debts) has been the engine of economic growth for centuries.

Corruption could "sabotage" it all, though, in practice. Not the fault of "in theory", however.

We have spent trillions on "investments" over the last 30 years and we see the pitiful results.
Politicians call them "investments" when they really mean "pay backs to my supporters."
Can you name any "investment" government has made in the last 50 years that actually yielded a return?

no, i cannot. Not the fault of Fiscal stimulus, in theory, per se. If corruption prevents the US from profitably employing Fiscal stimulus, then that corruption will "sabotage" & "hamstring" the US economy

How are we doing on the "War on Poverty"?

i don't know much about "Head Start" or "Job Corps". If they actually are a waste of money, then... they actually are a waste of money. Not the fault of Fiscal stimulus per se... any more than "crony capitalism" (businesses borrowing badly because of corruption) says anything about actual capitalism.

 

[ilia25]

Wonderful! As long as we're subjectively making this up as we go along, let's say 40% is a 'small' cut. Either that or we could get serious and see what actually happens in real life.

In 1946 the GDP shrank 12%. Far worse than today's performance. That year we cut spending by 40% over the past year and approved a budget cutting it another 40%. The GDP soared bringing in decades of prosperity.

40% is a small cut then.

In 1946 the economy was not depressed. Cutting spending only increases deficits if the economy is depressed. The bigger cuts, the worse the economy and deficits will get.

Are you totally unfamiliar with how the Depression of 1920-1 ended?

There was no depression in 1920. The recession was caused by Fed reining in on inflation (just like in 1981). Once the inflation was subsided, Fed eased its policy and the economy springed back.

Today we have the opposite -- Fed is unwilling to ease the monetary policy.

 

[expat_panama]

...In 1946 the GDP shrank 12%. Far worse than today's performance. That year we cut spending by 40% over the past year and approved a budget cutting it another 40%. The GDP soared...

In 1946 the economy was not depressed...

In 1946 the GDP shrank 12%. In 2008 the GDP shrank 0%. Seems like we're disconnecting here as I like to stick with business and am not very good at following you into politics. It's been fun though, cheers!

 

[TakeAStepBack]

a business is a big group of people working together. Except during civil wars, a country is a bigger group of people working together. As private businesses borrow for private investments (machines, factories), the "Public enterprise" could borrow for Public investments (basic education, infrastructure). Big, and bigger, groups of people borrowing today, building profitable investments tomorrow, and reaping the rewards the day after (as they pay back their debts) has been the engine of economic growth for centuries.

Corruption could "sabotage" it all, though, in practice. Not the fault of "in theory", however.

You're equating private lendign and borrowing with public "borrowing" from the publics children to fund things "needed". That is not where we are at here. We have infrastructure, schools, etc. What you're asking for is for the govt. to take the nation further into debt by borrowing money from china to pay for things we can not afford. That is not wealth creation, it's debt slavery and market distortion. Furthermore, borrowing is not the way economic growth has happened for centuries, but instead by savings re-invested into profit generating enterprises.

 

[ilia25]

Would probably does not mean anything.

Stop playing dump. We don't know for sure where exactly the unemployment would have peaked in the absence of Obama's stimulus. But are absolutely sure that it would have been much worse that 10%.

 

[TakeAStepBack]

In 1946 the economy was not depressed. Cutting spending only increases deficits if the economy is depressed. The bigger cuts, the worse the economy and deficits will get.

Are you totally unfamiliar with how the Depression of 1920-1 ended?

There was no depression in 1920. The recession was caused by Fed reining in on inflation (just like in 1981). Once the inflation was subsided, Fed eased its policy and the economy springed back.

Today we have the opposite -- Fed is unwilling to ease the monetary policy.

So, QE1 and QE2, along with operation twist, historically low interest rates and government programs to bailout anyone who got bucked by the bust is not easing?

Let me ask again, what is currently the problems with our economy?

 

[The Rabbi]

Right, another silly trick -- a troll restates what you have just said and then asks: "Are you really this stupid in real life?"

Because when I restate it is obvious you don't have the first fucking clue as to what you're talking about.

You are so pissed off because I know how to handle trolls. You can't argue the issues and go ad hominem, exposing yourself for what a troll you are.

I'm glad you think you can handle something. Because in econ you suck. Your ideas are simply obviated by reality. You dont have the first clue as to what you're talking about. Your beliefs are simply wrong. It isn't that you dont know about it. It is that everything you do know is wrong.

 

[TakeAStepBack]

Would probably does not mean anything.

Stop playing dump. We don't know for sure where exactly the unemployment would have peaked in the absence of Obama's stimulus. But are absolutely sure that it would have been much worse that 10%.

I'm only playing dumb to compete with you here. There is no absolute certainty on anything other than what actually happened. And what that is, is that the stimulus failed to produce its expected outcome by a long shot. In which case the political talking point changed from "this is gonna get us going again" to "well, it would have been much worse otherwise."

It's bullshit. The stimulus didn't work at all according to the expected outcomes and the reason for it in the first place.

 

[ilia25]

...In 1946 the GDP shrank 12%. Far worse than today's performance. That year we cut spending by 40% over the past year and approved a budget cutting it another 40%. The GDP soared...

In 1946 the economy was not depressed...

In 1946 the GDP shrank 12%. In 2008 the GDP shrank 0%.[/I]

The GDP shrank 5% in 12 months following Leman collapse. The economy is depressed when you have high unemployment and GDP is significantly below potential. It was not the case in 1946.

 

[TakeAStepBack]

Let me ask again, what is currently the problems with our economy?

So, is it that we have high unemployment and "significantly below potential" GDP?

What is our problem here?

 

[CrusaderFrank]

Japan recovered in the 1990's?

Seriously?

I guess Japan's lost 2 Decades were a sign of Stimulus success, just like FDR Depression and Obama's Deep recession

 

[TakeAStepBack]

Japan recovered in the 1990's?

Seriously?

I guess Japan's lost 2 Decades were a sign of Stimulus success, just like FDR Depression and Obama's Deep recession

It's mind boggling, isn't it? Japan went to the shitter, borderline hyperinflated their currency and came away with 2 lost decades (and a seriously blundered currency) and a slogan "the japanese miracle" and this is a sign of stimulus success.

And the progressives wonder why the rest of us think they're all for destroying the country....

 

[ilia25]

Are you totally unfamiliar with how the Depression of 1920-1 ended?

There was no depression in 1920. The recession was caused by Fed reining in on inflation (just like in 1981). Once the inflation was subsided, Fed eased its policy and the economy springed back.

Today we have the opposite -- Fed is unwilling to ease the monetary policy.

So, QE1 and QE2, along with operation twist, historically low interest rates and government programs to bailout anyone who got bucked by the bust is not easing?

Let me ask again, what is currently the problems with our economy?

The problem is that we have high unemployment and depressed economic output because of low level of spending by the private sector. And yet private sector has tons of cash, but it prefers to park it in zero-interest assets or accounts rather than spending it, or investing in expansion of production capacity.

There are two ways out. First we can encourage the private sector spending by a credible treat of higher inflation down the road. Second, the government can borrow the excess of private sector saving (at current low interest rates) and spend it on infrastructure,
research, weapons and so on. Either way it will cause the unemployment to drop and will start a virtuous cycle of increasing private sector spending, so making unemployment lower and so encouraging the private sector to spend more.

 

[OohPooPahDoo]

He says very very clearly in his book that the government should spend money exactly like it did when WW II started to end this current depression the way it ended the Great Depression.

Does any liberal dare to think that by producing about 100 million planes tanks ships heavy weapons and tanks that it would help rather than hurt our economy??

I dunno, did it help or hurt last time around?

 

[TakeAStepBack]

There are lowered levels of spending because prior to the markets attempted correction in 2008, people were borrowing far beyond their means. That is what increasing cheap credit gets you. 40% of the countries wealth was wiped out through this last go-round of bubble/burst. People are in serious debt, they are not "parking lots of money" anywhere. Corporations that are receiving excellent care through govt. subsidies and competition destroying regulations are making profits, but they are not re-investing those profits here because the overhead to run a business in the USA, thanks tot he govt.s intrusions, is not enticing.

There is an easy way out of this problem: Cut govt. spending to meet revenue. Repeal regulations across the board, along with subsidies. Cut the minium wage law out, cut out the hiring taxes imposed by govt. Business required insurance coverages, and a host of other taxations that keep businesses from bothering adn you will see massive improvements without collecting a single additional tax dollar except the fact people will get back to work and start paying them again. No percentage incre4ases needed.

Stimulus didn't work after WWII, they didn't work all nine times the japanese tried them in the 90s and they did not work for us un 2008-09. That is because this idea doesn't work. Now it's simply ad nauseum on this.

 

[ilia25]

There are lowered levels of spending because prior to the markets attempted correction in 2008, people were borrowing far beyond their means.

Yes, that caused an initial drop in spending. But there is entirely different reason for spending to remain low years after that. And it is simple -- your income is someone else's spending. So if everyone starts spending less, your income drops and your debt problems get worse even as you are cutting your own expenditures.

Now when the unemployment is high, the consumer spending is severely constrained. So although companies and banks sit on tons of cash, they do not spend it on expanding production capacity and they do not hire -- the sales are too low to warrant an expansion.

And the economy can remain that that equilibrium for years -- that is what the depression is about.

People are in serious debt, they are not "parking lots of money" anywhere.

But banks and companies do have a lot of money -- they just not spending it.

Corporations that are receiving excellent care through govt. subsidies and competition destroying regulations are making profits, but they are not re-investing those profits here because the overhead to run a business in the USA

Wrong, they are not doing it because the sales are slow.

 

[expat_panama]

In 1946 the economy was not depressed...

In 1946 the GDP shrank 12%. In 2008 the GDP shrank 0%.[/I]

The GDP shrank 5% in 12 months following Leman collapse....

No it didn't.

Let's walk though it together; we get the start date from here:

...Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008...

--and we get the GDP from here:

REAL GDP Q4 2008 = 12883.5
REAL GDP Q4 2009 = 12813.5
​

This is how the math goes: 1 - 12883.5 ÷ 12813.5 = -½%