So take a step back responds. He says:
Well, Stimulus is and bailing out failed institutions is creating more of a problem. Do we really want to focus on making it worse, or making it better?
I do not remember saying that bailing out failed institutions should be a component of recovery. That, as you well know, is a totally separate issue. But you are saying stimulus will make it worse. So, that is an interesting concept. Perhaps you would like to show a time when stimulus did not help a bad economy, particularly a bad unemployment economy. Then your statement may have some rationality to it. Till then, you just made a failed political argument.
Then step says:
OK, so TARP, the Stimulus, QE1, QE2 and Operation Twist have worked? How about the latest QE? Is that working? Because from what we're seeing, it isn't working at all.
Very much a con statement, step.
TARP was not a stimulus. It was an effort to save the economy from moving to a depression. But it was not a stimulus.
QE1 and 2 were not stimulus, but credit easing efforts. Did they work? Not a great deal of help, but some according to most economists. The efforts proved the old economic saying that you can not push on a string. Demand is the problem, and easing credit does very little for demand. Operation Twist is ongoing, and again is an effort to push on a string. It may have some value, but not a lot. Stimulus did indeed work, but really amounted to only a little over $500B in stimulus spending. The rest was in tax decreases.
Then step says:
It makes a lot of difference. It's the entire point of the financial crisis that unfolded. Too much credit available due to low interest rates that caused a boom (coupled with govt. initiatives on home ownership) in real estate. Artificially spiking demand and causing the moral hazard of malinvestment and predator lending. People were already excessively in debt and borrowing far more than they could ever afford to pay back (sound familiar??). This is the very problem and pumping more borrowing opportunities into the banking sector, along with excessively low interest rates is only compounding and extending the problem. So again, it makes ALL the difference when comparing these two events.
Nice political argument. But highly questionable. And has NOTHING at all to do with the unemployment rate at this point and going forward. Nice way of avoiding an argument you are trying to avoid. Try to stay focused on the current problem, which is unemployment. If you want to litigate what went wrong in 2008, and the lead up to that event, find a different thread.
Whatever it takes? So, 100 trillion more? two hundred trillion? We're borrowing now. In fact, a lot of borrowing. Taxing the rich barely dents the deficit, let alone touches any national debt. It's not a plan to reduce debt. It barely reduces deficits.
Lets try to be rational, step. Taxing the rich will not eliminate the national debt. The national debt and the deficit will not get significantly better until revenue increases, which will not get better until the UE rate is better. And demand is better. Take a look at history. And you may actually get a clue.
You see, step, we have proven in real life that bad unemployment numbers result when demand is low, and businesses are laying off as a result. So, what I am pointing to is stimulus, where the effort is to increase demand until the rate is reduced and the economy is working again. Not immediately eliminating either the deficit or the national debt. Because, as history again shows, those number will only get better with full employment.
Finally, step ends with:
I'm not really sure what your point is here. You seem to be of the opinion that we can just borrow and print, hold interest rates low and have highly leveraged people just keep borrowing. Then we'll borrow and print some more. Some how, eventually, this will lead to a boom in business that will lower UE. But it hasn't worked in 4 years, so I can't see how it is going to work at all. Maybe if we pump 100 Gazillion into the borrowing market, we can "recover".
I do not remember ever suggesting borrow and print, as you suggest. Borrow, perhaps, but I do not believe print will ever be part of the solution in a measurable way. And sorry that you do not get it. It is really simple, if your mind is open. Again, it is called stimulative spending. Creating jobs through spending on things like infrastructure. Which increases demand.
Is that so difficult to understand, step. Again, look at Roosevelt, Reagan, and Clinton. All were faced with problems with unemployment, and all used stimulus successfully. And no, it has nog been tried for the last 4 years. Just one time at around a half trillion bucks, not gazillions. And it has been stopped by repubs the rest of the time.
So, step, if my history is wrong, let me know. I have been wrong before. And if you have a better solution to the unemployment rate, inform us. You seem to be just saying nothing works so far. What do you suggest.
