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

[Kevin_Kennedy]

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

 

[Paulie]

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

 

[gonegolfin]

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.

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

 

[Kevin_Kennedy]

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

Those greedy hoarders...

If he thinks saving is a bad thing I suggest he read a little Rothbard.

 

[Diuretic]

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.

IT WAS eminently predictable and now it's happened: the unabashed return of Keynesian fiscal (budgetary) policy.

This was the message that shone from this week's mid-year economic and fiscal outlook document, which belatedly provided the fine print to accompany the grandly named Economic Security Strategy announced three weeks earlier.

For as long as the economy was booming and producing endless budget surpluses it was possible for some to imagine the bad old Keynesian days were behind us and we'd entered the nirvana of permanent surplus. But any old hand could have predicted that the Keynesian approach would return in triumph just as soon as the economy entered a serious downturn.

So what are the principles of the Keynesian approach?

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

More at the link, it's an easy but interesting read.

 

[Kevin_Kennedy]

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.

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

 

[Diuretic]

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

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?

 

[BaronVonBigmeat]

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.

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.

 

[Kevin_Kennedy]

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?

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.

 

[xsited1]

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

You've got it backwards. Regulation and government interference caused this mess. A Keynesian approach always results in debt and failure.

 

[editec]

How does the author KNOW what Obama's stimulus package is?

Hve the details of it been announced yet?

Did I miss it?

 

[Kevin_Kennedy]

How does the author KNOW what Obama's stimulus package is?

Hve the details of it been announced yet?

Did I miss it?

I believe the author is merely commenting on stimulus packages in general, as regardless of the amount it's only going to further hurt the economy.

 

[Paulie]

How does the author KNOW what Obama's stimulus package is?

Hve the details of it been announced yet?

Did I miss it?

Some proposals have been mentioned, such as extending food stamps, another tax rebate, and money for infrastructure projects.

I support infrastructure spending, but we can't sustain such an expense without trimming the budget. There's just no room for any added expense right now.

 

[Zoomie1980]

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

The moves afoot right now are strikingly similar to those brought forth by the Hoover administration in 1932???? Why would Obama want to emulate a failed Republican administration in almost everything they are proposing????