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Originally Posted by dippin
I dont think you got what I was saying. The point is not to "fool" ourselves, but to provide growth during a recession. Then as the economy pulls out of it, you can cut spending.
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I understood. My point is that "government stimulus spending" is like taking a drug that gives you a burst of energy and then causes an equal and opposite reaction when the drug wears off. I prefer a proper diet, proper rest and to train my body for the tasks I need to accomplish. No short cuts.
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Now, as far as the money supply goes, the m1 fetish is severely outdated. Interest rates matter more nowadays than targeted money supply, and we are already at 0.
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I don't agree that maney supply analysis is outdated. And, there are different ways to measure interest rates or the true cost of money/capital. The rate you get on a savings account is not reflective of real interest rates or the real cost of capital. A business wanting to invest in growth can not get a loan at 0%.
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It is not generational theft, as I pointed out that there is a net social profit from that spending.
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The only net profit occurs when the investment made by government gives a higher return than if that investment was made by the private sector. For example our investment in the interstate highway system was most likely a profitable investment by government.
Also, the "stimulus" bill was not really a stimulus bill, it is a spending bill and they sold it as a stimulus bill. Many of the projects were already planned and money was going to be spent on them anyway. That is not new spending. In some cases the federal government is spending money that the states would have spent. That is not new spending. The government targeting "green" industries may prove to be wasteful and have unintended consequences, like the past focus on ethanol subsidy and the impact those subsidies had on the cost of food.
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In any case, it is damn dishonest for McCain to talk shit like that after he approved the last 8 years of deficit spending. Specially when the republican response is "more tax cuts." Bush already generated 32 trillion dollars in unfunded liabilities for the next generation, and McCain was right there with him.
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It was generational theft then and it is now. Other than McCain being a hypocrite, which I agree with, what is your point? Are you suggesting he is correct now or that he was correct then?
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And with regards to the great depression, people might argue about the role of govt. spending, but virtually every economist saw at least some usefulness in at least part of the new deal. Not that everything was great, but there were a great many programs that helped.
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Here we go with the mythical "every economist". Mr. Every Economist does not exist. And even if he does it is only in the minds of those when it is convenient.