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Old 02-18-2009, 12:29 PM   #201 (permalink)
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Originally Posted by shakran View Post
Yeah, and Lincoln didn't sign the Emancipation Proclamation, and the Revolutionary War never happened - England just gave up their claim on us. Oh, and Kennedy was never shot, and Nixon didn't do it.

As long as we're rewriting history, why not do it in more than just economic areas?
When was FDR's New Deal initiated?

When did the economy recover from the Depression?

When did the stock market crash?

When did it reach a new peak after the crash?

What was the average unemployment rate during FDR's Presidency?

If you begin to honestly look at the answers to those questions, your perseption may change.
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Old 02-18-2009, 12:52 PM   #202 (permalink)
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Filterton for god sakes, talk a bout sticking with a line of argumentation, and I've only been on this for two posting sessions.

Noone has dissputed any of the behaviors I mentioned earlier, nor have they confronted them when they happen on this very board. Just making that clear, I'll just copy these down and paste them every time you bring up how persecuted liberal thought is.

And a relatively minor point of fact mentioned 6 months ago, has put filterton in a sort of cognitive quicksand. sorry dude. Get over it.
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Old 02-18-2009, 12:58 PM   #203 (permalink)
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Filterton for god sakes, talk a bout sticking with a line of argumentation, and I've only been on this for two posting sessions.
I'm just saying. Your sudden need for documented evidence seems suspect in light of your previous aversion to it.

By all means, keep asking for evidence and keep on pedantically denying the relevance of any evidence actually offered.
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Old 02-18-2009, 07:28 PM   #204 (permalink)
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Originally Posted by aceventura3 View Post
When was FDR's New Deal initiated?

When did the economy recover from the Depression?

When did the stock market crash?

When did it reach a new peak after the crash?

What was the average unemployment rate during FDR's Presidency?

If you begin to honestly look at the answers to those questions, your perseption may change.




And see that bump up in unemployment in 1938? That was the one year FDR tightened the budget a bit.



So dropping the unemployment rate about 3% a year sounds pretty good to me.
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Old 02-18-2009, 07:51 PM   #205 (permalink)
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matthew, i really don't see the utility of these posts of yours.
I'm starting to suspect that matthew has been educated by GoPAC. He's basically setting up the premise that nothing can refute his claims because anything that does refute his claims doesn't count because he hasn't heard of the congresswoman, or because it happened more than 30 minutes ago. Or, better yet, we'll just pretend none of this has happened and continue to make our point as though no one has refuted what we've said.

If you watch a typical republican interview on TV, they use tactics exactly like this. You ask them why they did X. They deny doing X. You show them a videotape of them doing X. They still deny doing X, and pretend the tape never happened.

It's really amazing how slickly they pull this off but, ya know what? The public isn't fooled by that crap anymore, because the lies and incompetence have finally hit them in the pocketbook rather than having a theoretical future negative result.
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Old 02-19-2009, 09:41 AM   #206 (permalink)
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Originally Posted by dippin View Post
So dropping the unemployment rate about 3% a year sounds pretty good to me.
We simply will disagree. I see the recession of 1937 as a consequence of government spending. I don't deny that government spending can have a temporary impact on the economy, but my position is that the spending will lead to higher taxation on the economy or inflation slowing the economy. I think the recession of 1937 shows government spending is not the answer.

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By 1936, all the main economic indicators had regained the levels of the late 1920s, except for unemployment, which remained high, although it was considerably lower than the 25% unemployment rate seen in 1933. In 1937, the American economy took an unexpected downturn, lasting through most of 1938. Production declined sharply, as did profits and employment. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938. In two months, unemployment rose from 5 million to over 9 million, reaching almost 12 million in early 1938. Manufacturing output fell off by 40% from the 1937 peak; it was back to 1934 levels. Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. In most sectors hourly earnings continued to rise throughout the recession, which partly compensated for the reduction in the number of hours worked. As unemployment rose, consumers' expenditures declined, leading to further cutbacks in production.

The Roosevelt Administration reacted by launching a rhetorical campaign against monopoly power, which was cast as the cause of the depression, and appointing Thurman Arnold to act; Arnold was not effective, and the attack ended once World War II began and corporate energies had to be directed to winning the war.

The recession was short, and by 1939 the effects had disappeared.

The Administration's main response to the 1937 recession was a $5 billion spending program in the spring of 1938, an effort to increase aggregate demand and mass purchasing power. Business-oriented observers explained the recession and recovery in very different terms from the Keynesians. They argued the New Deal had been hostile to business expansion in 1935–37 and had encouraged massive strikes.

It began to get better in mid-1938, and every month it was better. However, employment did not regain the 1937 level until the war boom began in late 1940. Productivity steadily increased, and output in 1940 was well above the levels of both 1929 and 1937. Personal income in 1939 was almost at 1919 levels in aggregate, but not per capita. The farm population had fallen 5%, but farm output was up 19%, so the remaining farmers were better off than the average farmer in 1939.

Employment in private sector factories recovered to the level of the late 1920s by 1937 but did not grow much bigger until the war came and manufacturing employment leaped from 11 million in 1940 to 18 million in 1943.
I think the clear lasting spark for the economy was war production and productivity gains from the innovations during that period.
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Old 02-19-2009, 10:16 AM   #207 (permalink)
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I think the clear lasting spark for the economy was war production and productivity gains from the innovations during that period.
Well then we must all be hallucinating this crappy economy, because we're in the middle of 2 wars, war production is high, and yet the economy's in the crapper. If the war pulled us out of the Great Depression then why are we in a major recession despite having been at war for 8 years?
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Old 02-19-2009, 10:18 AM   #208 (permalink)
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Originally Posted by aceventura3 View Post
I think the clear lasting spark for the economy was war production and productivity gains from the innovations during that period.
That could be, but one thing that's often overlooked is that in terms of living conditions, the wartime period was even WORSE than during the Depression itself. There was rationing, even longer bread lines, etc. Unemployment dropped because we were suddenly making tanks, but a lot of that was from people who had never previously been employed (and who were therefore not counted in previous unemployment figures)--think Rosie the Riveter. Many of the previously unemployed went and died in trenches, which isn't exactly a step up if you ask me. In short, the wartime numbers were higher on the economy, but people didn't really SEE anything from that, mostly that was being spent on the war itself.

It was actually the post-war era when the real results started showing up on the street, economically speaking. By then there were LOTS of factors coming to bear on the economy well beyond simple government expenditure. In that sense, it's not really accurate to say that war spending was what ended the Great Depression. At least, it's an oversimplification.
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Old 02-19-2009, 10:29 AM   #209 (permalink)
 
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but even if that argument held--which leans on the quite non-conservative claim that the american capitalist system was once geared around over-production and required ways to dump that over-production in order to operate at anything like full capacity---which is the war economy argument....even if that held, what possible relation would there be between the 1930s and 40s in terms of geography of production and the contemporary period, which insofar as the united states is concerned in particular, is one of deindustrialization?

this is not unlike the other rb's question above, but gets to another register of problem as well.
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Old 02-19-2009, 10:54 AM   #210 (permalink)
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Originally Posted by shakran View Post
Well then we must all be hallucinating this crappy economy, because we're in the middle of 2 wars, war production is high, and yet the economy's in the crapper. If the war pulled us out of the Great Depression then why are we in a major recession despite having been at war for 8 years?
Very simply put, in WW2 our factories were near capacity in churning out goods both for military and civilian use. When the war ended people came home and mass consumerism began, the factories were churning out products for consumers, the military was pumping money into companies for R&D and we had come through the Depression because of the war, the VA loans for housing and education. Companies thrived because the government helped them with lucrative contracts and because we were building highways and a great infrastructure.

Reagan started it by taking away the lucrative contracts. Then we got "free trade"....

Now, we are at war but our industry doesn't produce anything. The R&D contracts don't help put people to work, the infrastructure has been largely ignored and is falling apart. We rely on steel, cars, and manufacturing from overseas so a war isn't pulling us out like last time. If anything it is hurting us because we became reliant on the goods from other countries.

So to compare how WW2 brought us out and how this war isn't helping is foolish. Times are different. In WW2 we were self reliant and produced.... this war we are dependent and have little production and that which we do have is in severe trouble because of our reliance on foreign made goods.
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Old 02-19-2009, 11:52 AM   #211 (permalink)
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Originally Posted by shakran View Post
Well then we must all be hallucinating this crappy economy, because we're in the middle of 2 wars, war production is high, and yet the economy's in the crapper. If the war pulled us out of the Great Depression then why are we in a major recession despite having been at war for 8 years?
WWII is very different from our current war in terms of the scope and impact on our economy. If I recall WWII in terms of people, production and spending was consuming well over 25% of our economy. No war since as come close to that.
-----Added 19/2/2009 at 02 : 58 : 32-----
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Originally Posted by ratbastid View Post
It was actually the post-war era when the real results started showing up on the street, economically speaking. By then there were LOTS of factors coming to bear on the economy well beyond simple government expenditure. In that sense, it's not really accurate to say that war spending was what ended the Great Depression. At least, it's an oversimplification.
During the war government spending was extremely high in order to support the war. After the war the normal economy greatly benefited from war time innovation and productivity gains. It was this application of spending in the private sector that gave us long lasting prosperity.

We can dance around the central question all day long but at the root Keynesian people won't address the question of - when does government spending begin to have a negative impact on economic growth? There simply is no free ride with government spending.
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Last edited by aceventura3; 02-19-2009 at 11:58 AM.. Reason: Automerged Doublepost
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Old 02-19-2009, 12:11 PM   #212 (permalink)
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Companies thrived because the government helped them with lucrative contracts and because we were building highways and a great infrastructure.
Precisely. which is what the stimulus should be doing right now.

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So to compare how WW2 brought us out and how this war isn't helping is foolish. Times are different. In WW2 we were self reliant and produced.... this war we are dependent and have little production and that which we do have is in severe trouble because of our reliance on foreign made goods.

Admittedly, but to claim that FDR's new deal had nothing to do with getting us out of the depression, and that the war had everything to do with it, is equally foolish. Giving shitloads of money to the corporations isn't what saved us in the 30's. Giving money to the middle class, who went out and bought stuff, is what saved us.

Quote:
We can dance around the central question all day long but at the root Keynesian people won't address the question of - when does government spending begin to have a negative impact on economic growth? There simply is no free ride with government spending.
And Laffer people won't address the question of - When does giving all of the money to the rich finally grind the economy to a halt because the rich have all the money?
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Old 02-19-2009, 12:16 PM   #213 (permalink)
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but even if that argument held--which leans on the quite non-conservative claim that the american capitalist system was once geared around over-production and required ways to dump that over-production in order to operate at anything like full capacity---which is the war economy argument....even if that held,
I am a supply sider and I will readily admit the laws of diminishing returns when it comes to tax rate cuts. A 10% reduction in marginal tax rates when the highest applicable rate being paid is 100% has a bigger impact than if that rate is 1%. I think there is a theoretical equilibrium marginal tax rate, a point where taxes received by the government is maximized against the benefits of economic growth

. I wonder if Kaynsian's believe the law of diminishing returns applies to fiscal policy or spending by the government. I can accept that government spending on something like education, when there was no previous spending on education could have a positive impact on economic growth. However, I think the benefit of government spending on education quickly diminishes when a basic infrastructure for education is in place and that additional spending by government becomes inefficient and wasteful. And that after a basic education infrastructure is in place private sector spending will be the most beneficial.

I think you mis-characterize the intent of American capitalism. I think it is geared to equilibrium production or equilibrium period and not over production. I think that explains our normal business cycles. Over-production is followed by under-production, which is followed by over-production, etc, all in search of equilibrium. If you argue this is inefficient I only agree to the point that sometimes the feedback mechanism is inefficient. However, I think this feedback mechanism will almost always be more efficient in the private sector than in the public sector.
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Old 02-19-2009, 12:19 PM   #214 (permalink)
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Originally Posted by aceventura3 View Post
We can dance around the central question all day long but at the root Keynesian people won't address the question of - when does government spending begin to have a negative impact on economic growth? There simply is no free ride with government spending.
Keynes (and Obama for that matter) say that TEMPORARY, SHORT-TERM government spending can TEMPORARILY take the place, for a SHORT TERM, of private-sector spending in propelling an economy. Obviously the hope is that it's of SHORT enough TERM that it's not a burden later. The fact is, a pure Keynesian move like this has never truly been done before. What happened in the Depression/WW2 was different as I outlined above (and which you seem to pretty much concur with). This is untried territory. Any reasonable person has lots of question marks about it.

But look, the other options are:
- Put money into the top of society so it trickles down (Which is absurd, because you really think the rich got rich by giving money away? That's been a losing hand for 90% of America for the last 20 years.)
- Manipulating interest rates (A reasonable tool that broke irretrievably the day the fed set the overnight lending rate at 0% and the TED spread didn't move an inch.)

What else are you going to do, ace? Sit it out and hope the unemployment bomb doesn't drop on you or someone you love? Okay, fine, as a private citizen, you might do that. But if you're the president, what do you do? Tell people to keep hope alive while they collect social security? You gotta do something, don't you? You were elected to do something. What would YOU do?

Quote:
Originally Posted by aceventura3
I wonder if Kaynsian's believe the law of diminishing returns applies to fiscal policy or spending by the government. I can accept that government spending on something like education, when there was no previous spending on education could have a positive impact on economic growth. However, I think the benefit of government spending on education quickly diminishes when a basic infrastructure for education is in place and that additional spending by government becomes inefficient and wasteful. And that after a basic education infrastructure is in place private sector spending will be the most beneficial.
Quite the opposite--Keynes claims a multiplication effect. Keynes postulated that each dollar the government spends is worth well MORE than a dollar, as it circulates through the economy. The buck you pay the guy to build the bridge gets spent in the bar that night, and the bartender spends it again to the beer company, and the beer company pays the secretary.... Each dollar gets multiplied. To me that sounds a bit like counting your chickens three times before they hatch, but it's what Keynes said. Google "Keynes Multiplier" for more on that--Wikipedia explains it well (and in somewhat fairer terms than I just did).

Last edited by ratbastid; 02-19-2009 at 12:28 PM..
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Old 02-19-2009, 12:27 PM   #215 (permalink)
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Precisely. which is what the stimulus should be doing right now.
We can let a handful of bureaucrats pick the market winners or we can let market participants pick the winners. Either way there will be winners. the problem with government picking the winners is that if they pick inefficient winners we all suffer, i.e. GM.

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Admittedly, but to claim that FDR's new deal had nothing to do with getting us out of the depression, and that the war had everything to do with it, is equally foolish. Giving shitloads of money to the corporations isn't what saved us in the 30's. Giving money to the middle class, who went out and bought stuff, is what saved us.
If government spending is the answer, why would we ever have recessions or depressions? The answer would be to simply spend more "government money".

Quote:
And Laffer people won't address the question of - When does giving all of the money to the rich finally grind the economy to a halt because the rich have all the money?
The list of the richest people in America is dynamic. The list today is very different than the list 10/20/30 years ago. Our economy is always creating new rich people. this cycle has lead to prosperity for all of us because of the chase for innovation, productivity gains, creativity, and efficiency. If I can be more productive than you and I get rewarded for that, and then you innovate becoming more productive than me, and the cycle continues, we get stronger and better. This natural selection process is what capitalism is all about.
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Old 02-19-2009, 12:39 PM   #216 (permalink)
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We can let a handful of bureaucrats pick the market winners or we can let market participants pick the winners. Either way there will be winners. the problem with government picking the winners is that if they pick inefficient winners we all suffer, i.e. GM.
I'll agree that we shouldn't be bailing out the corporations. I'd rather see them split that 780 billion dollars amongst the lower and middle class on an individual basis (because if, say, the poor guy suddenly has 250,000 bucks, he's gonna go buy things, and that, would bail out the corporations.

But either way, the government's gonna have to spend money.



Quote:
If government spending is the answer, why would we ever have recessions or depressions? The answer would be to simply spend more "government money".
You've had 28 years to do it your way - reduced government spending, deregulation, letting corporations do almost whatever they want. . .Hasn't worked well, has it?



Quote:
The list of the richest people in America is dynamic. The list today is very different than the list 10/20/30 years ago.
Not as dynamic as you claim. Obviously it's gonna be somewhat dynamic because even the rich can't buy their way out of dying (well. not forever, anyway).

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Our economy is always creating new rich people. this cycle has lead to prosperity for all of us
Tell that to the people who are out of work because of this. . prosperous. . economy. Tell that to the people who are losing their houses because their company laid them off because the economy is in such wonderful shape that no one wants to spend any money. That cycle led to fake prosperity for some of us (you conveniently forget that even when the economy was good, we had homeless people starving on the streets), but it was unsustainable prosperity because wages were going down, jobs were being outsourced, and people were having to borrow to maintain that illusion of prosperity. We've not had prosperity in this country for anyone but the very wealthy since Reagan's policies started having an effect. We've only had the illusion thereof, which was enough to fool people into letting the republicans screw with the economy far longer than they should have, but as we can see it's all come crashing down now.


It is disingenuous to the hilt to proclaim as excellent and prosperous the economic theories which ended in a tremendous financial crash felt around the globe.
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Old 02-19-2009, 12:42 PM   #217 (permalink)
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Keynes (and Obama for that matter) say that TEMPORARY, SHORT-TERM government spending can TEMPORARILY take the place, for a SHORT TERM, of private-sector spending in propelling an economy. Obviously the hope is that it's of SHORT enough TERM that it's not a burden later. The fact is, a pure Keynesian move like this has never truly been done before. What happened in the Depression/WW2 was different as I outlined above (and which you seem to pretty much concur with). This is untried territory. Any reasonable person has lots of question marks about it.
Obama's premise is that only government can solve our current problems, I think his premise is flawed. I also think that he has failed to outline the long-term impact of his plan.

Quote:
But look, the other options are:
- Put money into the top of society so it trickles down (Which is absurd, because you really think the rich got rich by giving money away? That's been a losing hand for 90% of America for the last 20 years.)
- Manipulating interest rates (A reasonable tool that broke irretrievably the day the fed set the overnight lending rate at 0% and the TED spread didn't move an inch.)
there are already signs the economy will hit the bottom and then start to improve before the "stimulus" takes hold. It reminds me of the story about a guy going to the doctor with a common cold. The doc say to take two aspirin and call him in a few days. the guy is better, and thinks the doctor visit and taking the aspirin was the cure.

Quote:
Quite the opposite--Keynes claims a multiplication effect. Keynes postulated that each dollar the government spends is worth well MORE than a dollar, as it circulates through the economy. The buck you pay the guy to build the bridge gets spent in the bar that night, and the bartender spends it again to the beer company, and the beer company pays the secretary.... Each dollar gets multiplied. To me that sounds a bit like counting your chickens three times before they hatch, but it's what Keynes said. Google "Keynes Multiplier" for more on that--Wikipedia explains it well.
Sure there is a multiplier, but that can be offset by inflation or increased taxes in the future. The government creates money, but they don't. the government spends money that was taxed, so they spend a dollar taken from someone. No net multiplier. The government uses deficit spending, this is paid back with interest in the form of inflation or higher future taxes - short-term multiplier then it gets reversed plus interest.
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Old 02-19-2009, 01:07 PM   #218 (permalink)
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Sure there is a multiplier, but that can be offset by inflation or increased taxes in the future. The government creates money, but they don't. the government spends money that was taxed, so they spend a dollar taken from someone. No net multiplier. The government uses deficit spending, this is paid back with interest in the form of inflation or higher future taxes - short-term multiplier then it gets reversed plus interest.
If you think this is a response to what I said about the principle of the Keynesian multiplier, but I assert you missed the boat on what it is. Which is fine with me, I don't 100% buy it myself, and I'm not looking for you to argue for or against it in particular. But if what I said was, "Baseball is a game played on a diamond with a ball and a bat," then what you said was, "I like gummy bears." Just so you know.
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Old 02-19-2009, 01:23 PM   #219 (permalink)
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If you think this is a response to what I said about the principle of the Keynesian multiplier, but I assert you missed the boat on what it is. Which is fine with me, I don't 100% buy it myself, and I'm not looking for you to argue for or against it in particular. But if what I said was, "Baseball is a game played on a diamond with a ball and a bat," then what you said was, "I like gummy bears." Just so you know.
There is a multiplier. Any dollar introduced into the economy if from government or any other source has a multiplier. However, this fails to describe what happens next. The question that begs an answer - can you create something from nothing? It is not like "poof" the government can introduce a new dollar with real economic value into the economy. My point is that they can print another dollar, but it won't have real economic value unless it is backed by something real.
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Old 02-19-2009, 05:23 PM   #220 (permalink)
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There is a multiplier. Any dollar introduced into the economy if from government or any other source has a multiplier. However, this fails to describe what happens next. The question that begs an answer - can you create something from nothing? It is not like "poof" the government can introduce a new dollar with real economic value into the economy. My point is that they can print another dollar, but it won't have real economic value unless it is backed by something real.
the gold standard is long dead.
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Old 02-21-2009, 12:51 AM   #221 (permalink)
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Originally Posted by shakran View Post
Yeah, and Lincoln didn't sign the Emancipation Proclamation, and the Revolutionary War never happened - England just gave up their claim on us. Oh, and Kennedy was never shot, and Nixon didn't do it.

As long as we're rewriting history, why not do it in more than just economic areas?
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Originally Posted by aceventura3 View Post
When was FDR's New Deal initiated?

When did the economy recover from the Depression?

When did the stock market crash?

When did it reach a new peak after the crash?

What was the average unemployment rate during FDR's Presidency?


If you begin to honestly look at the answers to those questions, your perseption may change.
Your verification that WWII, not the New Deal, was what propelled us out of the Great Depression was well done. I would also have included a comparison of unemployment in the US vs. the rest of the world in the wake of the New Deal to further demonstrate the accuracy of your opinion. With the benefit of historical perspective, it is ludicrous to cling to the claim that the New Deal did anything but worsen our economic woes.

That claim may, however, serve a purpose in distracting us from other aspects of Obama's performance:

U.S. sticks with Bush position on Bagram detainees | Reuters
Quote:
U.S. sticks with Bush position on Bagram detainees
Sat Feb 21, 2009 4:38am GMT


WASHINGTON (Reuters) - The Obama administration on Friday told a federal judge it would not deviate from the Bush administration's position that detainees held at a U.S. air base in Afghanistan have no right to sue in U.S. courts.

In one of his first acts in office, President Barack Obama ordered the closure within one year of the Guantanamo Bay detention centre, which has been widely criticized by rights groups and foreign governments. About 245 people are currently held at Guantanamo, according to the Pentagon.

However, Obama has not yet decided what to do about the makeshift prison at the U.S. military base in Bagram, where the U.S. government is holding more than 600 prisoners, or whether to continue work on a $60 million prison complex there.

In late January, Obama directed a task force to study the government's overall detainee policy and report back to him in six months.

But the new administration faced a February 20 deadline to tell U.S. District Court Judge John Bates whether it would "refine" the Bush administration's position on four men being held at Bagram who have filed suit against their detention.

In a brief filing with the court on Friday, the Justice Department said it would stick to the previous government's position, which argued the four men -- who have been detained at Bagram for over six years -- had no right to challenge their detention in a U.S. court.

Barbara Olshansky, lead counsel for three of the four detainees and a visiting professor at Stanford Law School, said she was deeply disappointed that the Obama administration had decided to "adhere to a position that has contributed to making our country a pariah around the world for its flagrant disregard of people's human rights."

She said she hoped that the Obama administration was merely signalling it was still working on its position regarding the detainee issue...
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Old 02-21-2009, 01:36 AM   #222 (permalink)
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the idea that somehow saying that it was the second world war that ended the great depression goes against Keynesian principles is one of the biggest puzzles around for me. "No, it wasnt government intervention aimed at building stuff at home that ended the great depression, it was government intervention aimed at destroying things abroad that did it." As if from an economic perspective building bombs and planes that are going to be destroyed abroad was completely different from doing, well, anything within the US borders... If anything, that perspective says that government spending and interventions should be much, much larger than it actually is right now. Maybe the US should declare a pretend war against the bottom of the ocean and spend massive amounts of money on creating a hole at the bottom of the ocean.
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Old 02-21-2009, 03:15 AM   #223 (permalink)
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Heres my take on it simplified and in a nutshell:

Money coming in from countries buying American goods such as food, supplies, guns, planes and tanks for their own war effort was a huge contributor in spending us out of the Great Depression. The post war boom was primarily funded by foreign countries buying American goods to rebuild all that was destroyed during the war. Even though we are in two wars now things aren't the same because most of our war effort is imported rather than exported as it was back then. The idea that spending a trillion dollars to build bridges and changing light bulbs in government buildings without generating any real wealth is somehow going to miraculously drag us out of a terrible recession long term is asinine to say the least. It will definitely help short term but it's not a long term fix by any stretch of the imagination. Until we get the trade deficit turned around and start deporting goods and importing foreign monies again things are only going to get worse over the long term.
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Old 02-21-2009, 06:24 AM   #224 (permalink)
 
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Originally Posted by scout View Post
Heres my take on it simplified and in a nutshell:

Money coming in from countries buying American goods such as food, supplies, guns, planes and tanks for their own war effort was a huge contributor in spending us out of the Great Depression.
Sure, if you want to ignore the facts.
Five years of negative GDP growth between '28-'33, followed by eight years of economic growth when the New Deal programs kicked in (rising GDP, with the exception of '37 when FDR cut New Deal spending).....all of which took place before any war spending.

BTW, the "lend-lease" policy of supplying the UK, France, USSR (and other allies) with war materials didnt start until early "41.

To what do you attribute those eight years of pre-war sustained economic growth if not the spending and job creation programs of the New Deal?

---------- Post added at 09:24 AM ---------- Previous post was at 08:20 AM ----------

Quote:
Originally Posted by scout View Post
The idea that spending a trillion dollars to build bridges and changing light bulbs in government buildings without generating any real wealth is somehow going to miraculously drag us out of a terrible recession long term is asinine to say the least. It will definitely help short term but it's not a long term fix by any stretch of the imagination.
No one, including Obama, has suggested its a "long term" fix.

It is a short term initiative to hopefully stop the continued downward slide and stabilize the economy.
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Old 02-21-2009, 06:44 AM   #225 (permalink)
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If you want a long term fix, start with the outsourced jobs. We have fewer jobs in this country ever since companies started outsourcing the jobs to China and other countries. This one's easy to fix. "Hey 3M. . .How much money did you save last year by using workers in Taiwan instead of your own country? 700 million? Guess how much your taxes just went up."

Then start actually making shit here again. We have no heavy industry, medium-heavy industry is decimated. . .We don't make anything anymore. We aren't generating wealth, we're just moving theoretical money around in computer systems. That's no way to run an economy.

We've been arguing a lot on whether or not the New Deal brought us out of the depression. The "war saved us" guys do have a point - - we made a bunch of crap for that war. Actually made it. And when the war was over, the factories made other things which were bought by Americans. This one's gonna be different because even if people get money again, a lot of it is gonna go overseas. Want a new TV? Will that be Toshiba, Sony, or Panasonic? Want a new car? Well the only viable choice, especially right now with the US companies in so much trouble, is between Germany or Japan. Maybe Korea if you don't mind burning oil after 50k miles Hell even our kids toys. . .Even /pencils/ are made in China. We need to get back to making stuff again, as that provides not only things for people to buy, but jobs to give them money to buy it with.

And all this crap about "it's a GLOBAL economy" is bumkus. If it were a true global economy then we wouldn't be able to hire some Chinese guy for 1 cent on the dollar. If it were a true global economy then there wouldn't be any such thing as trade deficits because it would be all one economy. It's not a global economy, that's just the excuse the asshole corporations use to explain why they're employing some 14 year old in Malaysia at slave wages instead of making good jobs available to the people that they want money from.
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Old 02-21-2009, 08:05 AM   #226 (permalink)
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Quote:
Originally Posted by scout View Post
Heres my take on it simplified and in a nutshell:

Money coming in from countries buying American goods such as food, supplies, guns, planes and tanks for their own war effort was a huge contributor in spending us out of the Great Depression. The post war boom was primarily funded by foreign countries buying American goods to rebuild all that was destroyed during the war. Even though we are in two wars now things aren't the same because most of our war effort is imported rather than exported as it was back then. The idea that spending a trillion dollars to build bridges and changing light bulbs in government buildings without generating any real wealth is somehow going to miraculously drag us out of a terrible recession long term is asinine to say the least. It will definitely help short term but it's not a long term fix by any stretch of the imagination. Until we get the trade deficit turned around and start deporting goods and importing foreign monies again things are only going to get worse over the long term.
so it was the collective spending of governments around the world that pulled the world out of the great depression? Yep, still Keynes. Although to be accurate the recovery did start long before WWII.
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Old 02-21-2009, 05:18 PM   #227 (permalink)
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Quote:
Originally Posted by dc_dux View Post

BTW, the "lend-lease" policy of supplying the UK, France, USSR (and other allies) with war materials didnt start until early "41.

To what do you attribute those eight years of pre-war sustained economic growth if not the spending and job creation programs of the New Deal?[COLOR="DarkSlateGray"]

.
From the chart you so conveniently provided us there was only 4 years of sustained growth between mid 1933 and mid 1937 and then there was approximately a one year decline between mid 1937 to mid 1938 and then there is a fairly steady increase until the chart ends. I'm very well aware that the lend lease started in 1941 but our European allies was officially and unofficially buying American goods almost from the beginning of the war. The "Battle for the Atlantic" with it's convoys of ships and vital supply lines from the west began in 1939 and lasted until the end of the war. The lend/lease program was a last ditch effort primarily help Great Britain and Russia during a time when their cash reserves was low. On a side note it wasn't until 2005 or 2006 they {Great Britain} finally made their last payment.

---------- Post added at 01:18 AM ---------- Previous post was at 01:00 AM ----------

Quote:
Originally Posted by dippin View Post
so it was the collective spending of governments around the world that pulled the world out of the great depression? Yep, still Keynes. Although to be accurate the recovery did start long before WWII.
I guess you could say that however I don't think the Great Depression affected the world economy like our current banking crisis has. There was a great demand for US goods and we profited with good paying jobs which helped bring us out of the gutter. This time there is no demand for US goods and no wealth flowing in from around the world. Once the trillion or three is spent and we begin paying interest with no money flowing in how long to you suppose Keynes theory will hold up? Keynes theory or not we can't continue to have a negative trade imbalance while shuffling the same money and notes between banks and ever have any hope of sustained growth.
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Old 02-22-2009, 08:41 PM   #228 (permalink)
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Here is a result of Obama's policies, both past and present. His "community organizing" with ACORN goes way back. The $31 million in taxpayer money they've received is apparently not enough for these thugs.


This is what you get when the president of the US tells you it's acceptable to renege on your mortgage payments. Someone on Youtube claims to have dug up some public records information on this poor, unfortunate woman:

Quote:
Donna Hanks initially purchased her home (315 South Ellwood, Baltimore, MD 21224) on 7/06/2001 for $87,000. She re-fi'd in 2005 for $270,000, went into bankruptcy in 2006, and this was the 2nd foreclosure. The $300 a month was actually the $340 a month she agreed to re-pay as she was over $10,000 behind in her payments. The house was sold in July 08 and they couldn't get her out until September 08 after not paying anything for over a year.
While I have not verified that information, it IS documented that the "greedy" bank no longer owns that house. In slightly over a month, we citizens no longer have a right to our money OR our homes!

Can we steal from the law-abiding to give to the lawless? YES WE CAN!
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Old 02-22-2009, 09:02 PM   #229 (permalink)
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Quote:
Originally Posted by scout View Post

I guess you could say that however I don't think the Great Depression affected the world economy like our current banking crisis has. There was a great demand for US goods and we profited with good paying jobs which helped bring us out of the gutter. This time there is no demand for US goods and no wealth flowing in from around the world. Once the trillion or three is spent and we begin paying interest with no money flowing in how long to you suppose Keynes theory will hold up? Keynes theory or not we can't continue to have a negative trade imbalance while shuffling the same money and notes between banks and ever have any hope of sustained growth.
The great depression was global and affected the world economy quite significantly. In fact, global trade only reached pre great depression levels recently.
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Old 02-23-2009, 05:47 AM   #230 (permalink)
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Originally Posted by Marvelous Marv View Post
Here is a result of Obama's policies, both past and present. His "community organizing" with ACORN goes way back. The $31 million in taxpayer money they've received is apparently not enough for these thugs.

This is what you get when the president of the US tells you it's acceptable to renege on your mortgage payments. Someone on Youtube claims to have dug up some public records information on this poor, unfortunate woman:



While I have not verified that information, it IS documented that the "greedy" bank no longer owns that house. In slightly over a month, we citizens no longer have a right to our money OR our homes!

Can we steal from the law-abiding to give to the lawless? YES WE CAN!
You know the campaign's over, right? So you don't have to pretend that ACORN is some huge pervasive boogeyman organization anymore.

What I want to know, is how much money Bill Ayers is getting out of the stimulus?
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Old 02-24-2009, 08:44 AM   #231 (permalink)
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Originally Posted by dc_dux View Post
Sure, if you want to ignore the facts.
Five years of negative GDP growth between '28-'33, followed by eight years of economic growth when the New Deal programs kicked in (rising GDP, with the exception of '37 when FDR cut New Deal spending).....all of which took place before any war spending.
This is the second time the above chart has been used here as proof that government deficit spending was the cause of economic recovery. It has be awhile since I seriously looked at Depression era data, and thought I would revisit some of the data given some of the conclusions being drawn from negative economic growth starting in 1937. I will just give raw data, from government sources, draw your own conclusions.

Here is the M1 money supply in billions:

1931 - 24.1
1932 - 21.1
1933 - 19.9
1934 - 21.9
1935 - 25.9
1936 - 29.6
1937 - 30.9
1938 - 30.5
1939 - 34.2

http://www.sjsu.edu/faculty/watkins/depmon.htm

Here is total government expenditures (first column) and total government "Civil and miscellaneous" expenditures (second column

1931 - 4.0 - 1.1
1932 - 5.1 - 2.1
1933 - 5.1 - 2.1
1934 - 7.1 - 4.6
1935 - 7.3 - 4.3
1936 - 8.8 - 4.1
1937 - 8.1 - 4.7
1938 - 7.7 - 4.9

One interesting note regarding the drop in spending between 1937 and 1938 - in 1937 there was 2.3 billion spent by the Bureau of Pension and Veterans Administration and 1.1 billion spent in 1938 and actual spending in the area of Civil and miscellaneous went up.

And next let's look at the actual deficit (first column) and tax receipts (second column).

1931- (.9) - 3.1
1932 - (3.1) - 2.0
1933 - (3.0) - 2.0
1934 - (3.9) - 3.1
1935 - (3.5) - 3.8
1936 - (4.7) - 4.1
1937 - (2.8) - 5.2
1938 - (1.5) - 6.2

http://www2.census.gov/prod2/statcom...ts/1937-07.pdf
1901-1950 Statistical Abstracts

When I look at the data I don't see government spending or government deficit spending as the driver of our recovery from the depression the depression. I do think there is a clearer connection with money supply growth and economic recovery. I do give government credit for that, however I still hold that deficit spending does not have a lasting positive impact on the economy and that increased taxes or increased inflation cancels any positive impact of deficit spending.
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Old 02-24-2009, 09:00 AM   #232 (permalink)
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Originally Posted by aceventura3 View Post
When I look at the data I don't see government spending or government deficit spending as the driver of our recovery from the depression the depression. I do think there is a clearer connection with money supply growth and economic recovery. I do give government credit for that, however I still hold that deficit spending does not have a lasting positive impact on the economy and that increased taxes or increased inflation cancels any positive impact of deficit spending.
No one is saying that deficit generate lasting growth. But it is not supposed to. It is supposed to provide some growth in a tight situation.

And while the increase in the money supply had a great deal to do with the recovery, there are two important points:

- we are already at 0% fed rates. This is a liquidity trap, additional money will not help. Only fiscal stimulus will.
- You seem to be holding on to what in the 1920s was called the treasury view. I.e., one dollar in deficit today means an proportionally equal increase in taxes tomorrow.

But this is not the case, because of three variables: the multiplier, the velocity of money circulation, and interest rates. So in other words, spending today will increase the velocity of the circulation of money. As long as the multiplier is not zero or negative, then we are talking about that dollar generating additional growth. So that dollar you spend today becomes that dollar + whatever growth you have tomorrow. As long as that dollar today + interest rates are not more than that, you are paying back proportionally less than what you spent.

Now, this means that in situations when you have a growing economy, deficit spending simply will crowd out private investment. This is true and this took place during the Bush years, which is why I think anyone concerned with fiscal discipline should have said something 4 years ago, not now.

But all of this also means that in situations where the economy is tanking, and interest rates are very low and the economy is still falling, any deficit spending will have a net positive effect. In a economy where tbond yields are close to 0%, and where the fed rate is 0%, government spending is not crowding out private spending. Any growth the govt. spending generates, even if temporary and very, very small, means that the one dollar they are spending today will be repaid by less than a dollar tomorrow.
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Old 02-24-2009, 09:07 AM   #233 (permalink)
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There was an interesting story on NPR today about Japan's "lost decade". Essentially their real estate market crashed just like ours and through them into a recession. At first they tried to lower interest rates and even lowered them down to almost 0% but it didn't help at all. In the end they had to do lots of deficit spending to get out of the recession.
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Old 02-24-2009, 09:24 AM   #234 (permalink)
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Originally Posted by dippin View Post
No one is saying that deficit generate lasting growth. But it is not supposed to. It is supposed to provide some growth in a tight situation.
Are you saying the point is for us to fool ourselves? Why even waste time with something that will have negative consequences in the future, why not take our lumps and pay the price for lasting sustained growth? If what you believe is shared by the folks in Washington, then I agree with McCain - "generational theft". We should do what we know will work - long-term.

Quote:
And while the increase in the money supply had a great deal to do with the recovery, there are two important points:

- we are already at 0% fed rates. This is a liquidity trap, additional money will not help. Only fiscal stimulus will.
The government can grow the M1 money supply by going into the market and simply buying back government bonds, notes, and T-Bills. The opposite of deficit spending. Oh, but one problem is that China holds so much of our debt and they may not want to spend their dollars in the US economy. Gee, we are in a endless negative cycle. At some point we have to pay the price.

They could also give back tax dollars to people who pay taxes, but we know that is not going to happen but let's give more money to failing banks, auto companies, home owners, and state governments like California. Screw those doing the right thing and those who can actually have a positive impact on economic growth.

---------- Post added at 05:24 PM ---------- Previous post was at 05:14 PM ----------

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Originally Posted by Rekna View Post
There was an interesting story on NPR today about Japan's "lost decade". Essentially their real estate market crashed just like ours and through them into a recession. At first they tried to lower interest rates and even lowered them down to almost 0% but it didn't help at all. In the end they had to do lots of deficit spending to get out of the recession.
Another problem with deficit spending is that often governments, and I bet NPR did not discuss this, sucks the energy (capital/resources/opportunity) from the private sector. an example from our Depression during the 30's

Quote:
And the industry might have indeed done that, if the government had not supplanted it. Roosevelt believed in public utilities, not private companies. He created his own highly ambitious infrastructure project--the Tennessee Valley Authority. The TVA commandeered the utility business in the South, notwithstanding the vehement protests of the private utilities that served that area.

Washington sucked up much of the available capital by selling bonds and collecting taxes to pay for the TVA or municipal power plants in towns. In order to justify their own claim that public utilities were necessary, New Dealers also undermined private utilities directly, through laws--not only the TVA law but also the infamous Public Utilities Holding Company Act, which legislated many companies out of existence. Other industries saw their work curtailed or pre-empted by government as well.

What about that oft-cited rising industrial production figure? The boom in industrial production of the 1930s did signal growth, but not necessarily growth of a higher quality than that, say, of a Soviet factory running three shifts. Another datum that we hear about less than industrial production was actually more important: net private investment, the number that captures how many capital goods companies were buying relative to what they already had. At many points during the New Deal, net private investment was not merely low, but negative. Companies were using more capital goods than they were investing in.
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Old 02-24-2009, 09:40 AM   #235 (permalink)
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Originally Posted by aceventura3 View Post
Are you saying the point is for us to fool ourselves? Why even waste time with something that will have negative consequences in the future, why not take our lumps and pay the price for lasting sustained growth? If what you believe is shared by the folks in Washington, then I agree with McCain - "generational theft". We should do what we know will work - long-term.



The government can grow the M1 money supply by going into the market and simply buying back government bonds, notes, and T-Bills. The opposite of deficit spending. Oh, but one problem is that China holds so much of our debt and they may not want to spend their dollars in the US economy. Gee, we are in a endless negative cycle. At some point we have to pay the price.

They could also give back tax dollars to people who pay taxes, but we know that is not going to happen but let's give more money to failing banks, auto companies, home owners, and state governments like California. Screw those doing the right thing and those who can actually have a positive impact on economic growth.

---------- Post added at 05:24 PM ---------- Previous post was at 05:14 PM ----------



Another problem with deficit spending is that often governments, and I bet NPR did not discuss this, sucks the energy (capital/resources/opportunity) from the private sector. an example from our Depression during the 30's



Featured Article - WSJ.com

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.

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.

It is not generational theft, as I pointed out that there is a net social profit from that spending.

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.

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.

And with regards to the current situation, only the republican faithful see no role for fiscal stimulus. When even Greg Mankiw, Posner, and Gary Beck see a role for fiscal stimulus (although they disagree with the democrats on the shape of the stimulus), you know it is needed.
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Old 02-24-2009, 10:39 AM   #236 (permalink)
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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.
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.

Quote:
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.
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%.

Quote:
It is not generational theft, as I pointed out that there is a net social profit from that spending.
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.

Quote:
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.
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?

Quote:
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.
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.
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Old 02-24-2009, 10:53 AM   #237 (permalink)
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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.
Yeah are ignoring the time component of it all. First, the issue of private vs public spending only really matters when one crowds out the other. We are having a major shortage of investment now even at 0% interest rates. Hence, there is no crowding out at the present moment.

Now, of course, debt today has to be repaid tomorrow. But one dollar today is not worth the same as one dollar tomorrow. In a growing market, where interest rates are high, one dollar today means several dollars of debt tomorrow, so deficits hurt the economy by taking out several dollars out of circulation in the future.

But with 0% interest rates and a tanking economy, it is much preferable to spend it today, because the debt will you need to repay tomorrow is worth significantly less.

So as long as that spending generates SOME stimulus, you are talking about about repaying that debt with just a portion of the investment.
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Old 02-24-2009, 11:10 AM   #238 (permalink)
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But with 0% interest rates and a tanking economy, it is much preferable to spend it today, because the debt will you need to repay tomorrow is worth significantly less.
Please let me know where you get 0%, nominal or real.

For most consumers, they pay over 7% for a 48 month car loan, over 11% for a 24 month personal credit card loan, and on average 13.36%.

http://online.wsj.com/public/resourc...nts/bbcncr.pdf
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Old 02-24-2009, 12:01 PM   #239 (permalink)
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Please let me know where you get 0%, nominal or real.

For most consumers, they pay over 7% for a 48 month car loan, over 11% for a 24 month personal credit card loan, and on average 13.36%.

http://online.wsj.com/public/resourc...nts/bbcncr.pdf
Well, we are not talking about consumers. We are talking about the interest rates the government is paying.

As a matter of monetary policy, the federal funds rate is between 0-0.25%
FRB: Monetary Policy, Open Market Operations

As a matter of borrowing from the private sector, yields for short term treasury bills are closing in on 0 fast

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Old 02-24-2009, 12:45 PM   #240 (permalink)
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The Federal Funds rate is the overnight rate banks pay. The purpose is so banks maintain liquidity in order to meet the demands of customers given fractional reserves.

What is real, outside of government bailouts for banks, in this current environment, is kinda what Buffet did when he invested $5 billion in Goldman Sachs. He is getting a 10% dividend, plus any upside in the stock price after $115. His investment puts him ahead of common shareholders. If Goldman could have gotten 0%, they certainly would not have done the Buffet deal.

Quote:
Sept. 24 (Bloomberg) -- Goldman Sachs Group Inc. won the backing of Warren Buffett, the world's preeminent stock-picker, as the Wall Street firm seeks to raise cash from investors whose faith in the investment-banking business model has been shaken.



The bank soared 11 percent to $138.17 in German trading today. For Goldman, the endorsement came at a price. Berkshire Hathaway Inc., led by the 78-year-old billionaire, is buying $5 billion of perpetual preferred stock with a 10 percent dividend. Berkshire also gets warrants to buy $5 billion of common stock at $115 a share at any time in the next five years. The common stock closed yesterday at $125.05, providing Buffett with an instant paper profit of $437 million.
Bloomberg.com: Worldwide

Here is what the government is paying:



True it is low and less than last year, but above 0%. People are seeking the safety of investing in the US. It is ironic that the world has so much confidence in the fundamental strength of the US economy and our ability to return principle accepting almost no risk premium - but our President has almost no confidence in the fundamental strength of the economy feeling only his actions can avoid a disaster of the scope we have never seen before....give me a break Mr. President.

Just like Buffet stepped in with Goldman, others would have stepped in with other financial institutions if the deals made sense.
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Last edited by aceventura3; 02-24-2009 at 12:48 PM..
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