Obama Voters: Buyer's Remorse?

Off Topic Politics & World Issues
81

[quote]dhickey wrote:
shookers wrote:
dhickey wrote:
shookers wrote:

You do realize there is a helluva a lot of economic support for the idea of a stimulus right?

this tells me nothing. logic and reason are not democratic.
[qutoe]
You saying it makes ZERO economic sense is a gross hyperbole, ignoring the voices of many renowned economists.

how about this…

it makes zero economic sense unless you are ok with long term damage to avoid short term discomfort.

What is the interest on the money we are borrowing?

What % inflation should we expect?
If there are magically calculated multiples for gov’t spending and tax cuts, what are the reduction multiples for increased taxation and gov’t consumption?

Please show me how this is a good long term investment.

Go read up on Japan’s national debt.

I don’t know how many times this has to be explained on this board. In economics one can not just point to historical examples and say “see it worked for them” or “see what happens when you raise taxes”. History is great for putting economic theory to test, but it cannot be used to form economic theory.

Japan’s national debt has nothing to do with this topic. Pointing at Japan as either a disaster or shining success is only useful in defining what side of this argument one is one.

I asked very simple questions and your response was “go read up on japan’s national debt”. It is quite obvious you do not understand the very basics of economics. You can not put together the potential short term benefit AND long term consequenses for the same action. This discussion will not go very far as I have no interest in discussing only short term effect.

You’ll just have to hang out and watch with 100meters.
[/quote]

You’re the Austrian and you’re telling me I don’t understand the basics of economics. Okay.

Perhaps if you did as I said, the history you’d read would answer all your questions about long-term effects of a deficit. Japan’s is at 180% of its GDP last I checked.

82

Did Bush make a pre-emptive strike against the downturn before it even started? I’ve always held his spending and deficits against him, but now I have to wonder. Maybe we would’ve lost even more jobs by now, had Bush not been spending like crazy prior.

83

[quote]shookers wrote:
dhickey wrote:

The free market is not perfect. I is the best we have. I have explained many thing on threads on this board. You need more help than I can give you in this medium. Read a couple of the books I recommended. At least understand how the business cycle and speculation work.

You’re completely missing the point. I want you to explain to me how free market mechanisms fix the spiral I described above. Don’t just say “it works”.
[/quote]
I thought I already had. go back and read my response to you infinite spiral argument.

Supposed to? again there are fundamental problems with this. I have already mentioned this but what the hell.

Economic knowledge is distributed throughout the market. It is not centralizes. Any effort to manipulate markets are done so with very limited information. Just looking at GDP, the stock market, or some vague indicator and making economic policy is a ridiculous concept.

There is no way for the fed to know what is happening in ever corner of the market. There is no way to predict the natural recovery or if your policy will do harm or good.

We have seen this play out in the real world time and time again. Messing with interest rates is no different that any other price fixing. We know what happens when we fix prices or artificially set either supply and demand (money supply manipulation). It completely fucks up speculation. The free market is run by speculation. We are all speculators.

There so much more to this but this is not the format most efficient to deal with it. You need to think about whether or not you want gov’t artificially setting supply and demand. You need to think about the different ways they can and have done this.

Niether are effetive.

Milton Friedman was one of the first economist I read, and I haven’t read anything by him in 2 years. This does not at all match my recollection. Are you saying MF advocated monitary manipulation? Maybe I need to go back and read hime again. this is a shock to me. if this is true, he was wrong.

This is just plain recless. Forget logic, lets just try something? Keynes was wrong on interest rates, let’s try another one of his ideas?

this is shocking. i would like to read his reasoning. do have a sourse for this?

I may have missed your point then. I agree with this other than gov’t borrowing having anything to do with it.

dumping insane amounts of borrowed money willy nilly into the market is not the same as buying goods and services you need with saved money. I cannot beleive we can’t get past this. how can you not see the distinction?

84

[quote]shookers wrote:
Jeffe wrote:
Anyone who thinks that they can “create” jobs by pouring tax money into a struggling economy would have failed their first semester at any business school.

The U.S. has a limited population. Of that population, some are too young, too old, too sick or otherwise unable to work. Of those that are able to work, some are uneducated and can’t read, some are highly intelligent and educated but are physically unable to perform heavy labor.

You can not, ever, create a job without taking a job away from another sector or industry. You also can not feed an economic recession more and more money and expect a positive outcome.
Wrong, hire an unemployed person

A little history…
In the 1920’s there was a significant recession following the slowdown of wartime production. The governments response then was to do as little as possible. They changed interest rates and restricted credit, but beyond that they relied on the public sector to revive itself. The outcome…the “Roaring Twenties!”
Wrong, the roaring twenties were caused by EASY credit, enormous amounts of buying on margin which created huge bubbles (sound familiar) - not the free market. It was also the recovery following WWI.

The Depression, arguably the most desperate time in U.S. history…what was the plan to get us out of the depression? Huge public works. Dams, bridges, tunnels, blowing up mountains. Whatever could be done to spend government money. The outcome? A decade of economic disaster.

Yes, the plan was to spend money to get money moving again. You’ll recall that while the New Deal didn’t get America out of the Depression, World War II did. WWII was basically just a magnified New Deal - MORE spending, MORE stimulus.

If you read anything written by proponents of stimulus, they will tell you that the reason stimulus didn’t work in the GD is because it was never tried (not enough money), not that it never worked. It took WWII (an even bigger stimulus) to finally work.

And now here we are again…a slight recession exacerbated by runaway government spending, absurd “Bail-Outs” and a total disregard for the lessons of our past.

A degree in Business and History should be a requirement for ANYONE running for a Federal Public Office. It would certainly help weed out all the assholes who fancy themselves “Visionary” who think they can turn a nation around with some nice speeches.

Hitler and Stalin ran their countries beautifully (at least in their design) by virtue of speeches and military force. That does not work in capitalist democracy where low taxes, sensible government spending, corvettes and SUV’s rule.

Again, stimulus was never officially tried on a big enough scale so there is no telling whether or not it will work. It has never been done before on this scale, therefore stating that history has categorically rejected projects of this kind is a lie.

It pisses me off that people here are so ignorant of the other sides of the argument. I’m not explicitly saying I support stimulus, but its not nearly as black and white as its being portrayed. If you guys want the economic argument I’d be happy to supply it.

[/quote]

That unemployed person still came from somewhere else, meaning that when the industry they came from is moving forward, they will feel a shortage of labor.

85

Einstein’s definition of insanity comes to mind when discussing the actions of our “leaders” in Washington since Lehman Brothers failed.

Saying that the historical results of governments trying to spend their way out of a recession are unclear is being generous to the proponents of spending. But lets say it for the sake of arguments.

When’s the last time a government fought recession by cutting spending, lowering taxes, and deflating the currency?

Anybody?

Stimulus spending didn’t exactly ignite the economies in the Great Depression or in Japan in the '90’s, and doing the opposite has never been tried.

So we try stimulus spending again? Why?

86

[quote]tGunslinger wrote:

Stimulus spending didn’t exactly ignite the economies in the Great Depression or in Japan in the '90’s, and doing the opposite has never been tried.

So we try stimulus spending again? Why?[/quote]

Well…some would have you beleive that it hasn’t worked becuase not enough was spent. Never mind logic, just rest assured that this is what John Maynard Keynes would do.

I don’t blame the politicians. I blame the idiots that vote for them. Actually idiot is a bit strong. Uneducated is a bit more accurate.

87

Actually, I spent a lot of time with The General Theory in college, and I seem to remember that Keynes at the end of his life recanted much of the theory. Does anyone else remember something about this?

88

[quote]dhickey wrote:
shookers wrote:
dhickey wrote:

The free market is not perfect. I is the best we have. I have explained many thing on threads on this board. You need more help than I can give you in this medium. Read a couple of the books I recommended. At least understand how the business cycle and speculation work.

You’re completely missing the point. I want you to explain to me how free market mechanisms fix the spiral I described above. Don’t just say “it works”.

I thought I already had. go back and read my response to you infinite spiral argument.

Most modern day “Keynesians” aren’t really Keynesians at all. He advocated running a surplus during boom times and a deficit in bust times - which in the long run are supposed to cancel each other out, mitigating these “long-term effects” you are so frightened of.

Supposed to? again there are fundamental problems with this. I have already mentioned this but what the hell.

Economic knowledge is distributed throughout the market. It is not centralizes. Any effort to manipulate markets are done so with very limited information. Just looking at GDP, the stock market, or some vague indicator and making economic policy is a ridiculous concept.

There is no way for the fed to know what is happening in ever corner of the market. There is no way to predict the natural recovery or if your policy will do harm or good.

We have seen this play out in the real world time and time again.

Messing with interest rates is no different that any other price fixing. We know what happens when we fix prices or artificially set either supply and demand (money supply manipulation). It completely fucks up speculation. The free market is run by speculation. We are all speculators.

There so much more to this but this is not the format most efficient to deal with it. You need to think about whether or not you want gov’t artificially setting supply and demand. You need to think about the different ways they can and have done this.

Most criticism of Keynes is directed at his rush to use Fiscal policy instead of Monetary policy.

Niether are effetive.

Milton Friedman in particular believed that Keynesianism was flawed not because government stimulus is a bad thing, but because Monetary policy should be manipulated rather than fiscal policy (which he asserted was wasteful and bad).

Milton Friedman was one of the first economist I read, and I haven’t read anything by him in 2 years. This does not at all match my recollection. Are you saying MF advocated monitary manipulation? Maybe I need to go back and read hime again. this is a shock to me. if this is true, he was wrong.

Right now however, this criticism is irrelevent. The interest rate is up against the 0 barrier and the only available tool now left is fiscal policy.

This is just plain recless. Forget logic, lets just try something? Keynes was wrong on interest rates, let’s try another one of his ideas?

It might interest you to know that during Japan’s lost decade, Friedman advocated Japan print money.

this is shocking. i would like to read his reasoning. do have a sourse for this?

Errr…you’re kind of proving my point here. If people are “richer”, i.e. have more money (Whether that be from saving during war time, or government borrowing), demand increases & the economy grows.

I may have missed your point then. I agree with this other than gov’t borrowing having anything to do with it.

That’s the point of the stimulus, to dump more money into the economy, to make everyone collectively richer to increase demand.

dumping insane amounts of borrowed money willy nilly into the market is not the same as buying goods and services you need with saved money. I cannot beleive we can’t get past this. how can you not see the distinction?[/quote]

First: http://www.mskousen.com/Books/Articles/exkeynes.html - citations are at the bottom

  1. Your response didn’t really explain how the spiral ends, it simply equivocated that it would. What you write seems to suppose that there will be a sudden spontaneous change in consumer spending where they switch from saving more than they spend to spending more than they save (sum total).

I would love for you explain how this happens - given that deflation incentivizes saving. Yes, boom follow busts during mild recessions, where deflation is rarely an issue (only consumer confidence). However, once the economy enters a deflationary spiral - it generally doesn’t let up instantly.

  1. No where do I or Keynes advocate central planning of the economy.

  2. Savings aren’t automatically invested. If this was true, investment would be skyrocketing now (as savings > consumption), instead its plunging, and investment would have been plunging during the last decade when in fact it was booming.

Indexed to GDP, investment has a deviation from trend 6 times that of GDP and is pro cyclical(not counter, as you are asserting). In the long run, yes, savings get invested. But typically there is no incentive to invest when companies are losing money.

  1. You last point - with regards to buying shit willy nilly. You know without me answering that the reason to “dump money willy nilly” is the Keynesian multiplier. THIS particular point, the Keynesian multiplier, is why most modern day economists disagree about the stimulus - not for all the reasons you listed above.

Some (e.g. Mr. Krugman) say that the multiplier is around 1.5 while others (e.g. Amity Shlaes) say its -0.2

Oh, and great argument so far. I hope you’re enjoying the discussion as much as me

89

[quote]katzenjammer wrote:
Actually, I spent a lot of time with The General Theory in college, and I seem to remember that Keynes at the end of his life recanted much of the theory. Does anyone else remember something about this?[/quote]

He recanted not because he thought his theory was wrong, more because he realized what evils his theory could be used to Justify.

Keynes wasn’t an advocate of big government (although he is today portrayed to be), he just thought fiscal policy was a powerful tool.

When he saw the excess spending held over from the New Deal, and others who abused his theory to advance their political ends, he regretted his effect on society.

90

[quote]tGunslinger wrote:

Stimulus spending didn’t exactly ignite the economies in the Great Depression or in Japan in the '90’s, and doing the opposite has never been tried.

So we try stimulus spending again? Why?[/quote]

I’m too lazy to dig up the data at the moment, although I will certainly look later - but during the one period that Japan increased spending rapidly, there WAS a stimulusing affect on the economy. Many say that if they had kept it up for longer, it would have gotten them out of their mess.

I’ll look later for the data later, I could certainly be wrong on a few details

Edit: http://www.petersoninstitute.org/publications/chapters_preview/35/2iie2628.pdf has the details

91

Why is the answer always, always, that they just didn’t spend enough…

92

[quote]Sloth wrote:
Why is the answer always, always, that they just didn’t spend enough…[/quote]

Look past the dogma and look at the data. Neither the great depression nor japan’s lost decade represented a major stimulus (FDR never stopped attempting to balance the budget - i.e. he raised taxes. read the chapter above for Japan info). The only time there was a huge stimulus (WWII), it worked.

93

[quote]shookers wrote:
Sloth wrote:
Why is the answer always, always, that they just didn’t spend enough…

Look past the dogma and look at the data. Neither the great depression nor japan’s lost decade represented a major stimulus (FDR never stopped attempting to balance the budget - i.e. he raised taxes. read the chapter above for Japan info). The only time there was a huge stimulus (WWII), it worked. [/quote]

So we start WW3?

94

One thing to consider also, while crises may drag on for an extended period, they’re temporary, no? However, when government expands it’s size and scope, that’s seems to be permament, so far. Let’s not give another inch they’ll never give back.

“You don’t ever want to let a crisis go to waste: It’s an opportunity to do important things that you would otherwise avoid.”
Rahm Emanuel

95

[quote]shookers wrote:
First: http://www.mskousen.com/Books/Articles/exkeynes.html - citations are at the bottom
[/quote]
That was really weak. So early in his life he was a keynesian but then realized he was wrong. This is quite different than what you implied. You did have me going though. I actually put Free to Choose back in queue. Looks like I can pull it back out.

instantly no. That’s not what I said. There is a point for any product or service where people will start to buy again. New cars won’t get to $5k. I really don’t know what is so hard to understand. If prices fall far enough, people will start buying again. Consumer goods, labor, business equipment, etc.

The other part you seem to completely miss is that savings is investment. Unless people are hiding money under their matress, money will hit the market.

what do you consider manipulating interest rates and gov’t direction of investment and spending? Come on now.

Is all investment savings? no. This is why your logic above doesn’t pan out. You also have to factor in credit. Is all savings investment? pretty much.

We do find ourselves in a bit of interesting predicament right now in that banks are holding cash instead of investing. why is this? well we put a shit load of cash in hands of banks that should have failed. If you had just been saved from insolvancy, you would probably be a bit skittish. So obvious, yet so ignored in the whole bailout plan.

Anyway, this is not a permanent state that we need to be jolted from. Banks don’t make money if they don’t lend and invest. As long as we quit funding them, they will have to make money by themselves. As long as we keep them on welfare money will not be invested or lent.

To think that market will come to a permanent halt is ridiculous. You have not explained in what alternate universe this would ever happen. People will just stop spending, let their houses, cars, businesses turn to ruin and starve to death before they spend a dime.

Investors don’t make money if they don’t invest. They would be buying if they could predict what the fuck this administration is going to do over the next 4 years. Speculation is 99% dependant on correct market signals and confidence. Experimentation by an inexperienced administration is going to keep people out of the market for sure. It will also keep guys like me from spending money.

Planned to replace my car - cancelled.
Planned trip with the fam to FL next month - cancelled.
Planned to buy a fun car to wrench on - cancelled.

I am sitting on 4 months salary right now. This money will not be spent anytime soon. If the dipshits in washington weren’t fucking with the economy, it would have been spent long ago. There are a lot of things I would like to buy.

I would have money in the stock market. I also have money set aside, waiting for it to completely shit itself.

I had considered a small franchise or commercial property with this money. Too risky now. If the dipshits in washington weren’t fucking with the economy, I would be at least moving towards this. Not even investigating it now.
Part of this money will pay off second mortgage and wifes SUV. The rest will wait for the market to tank.

I am absolutly furious about my tax rate being increased. Furious enough that I will paying in much less than I did last year. I am going without things I want but don’t need. I am going for maximum deductions.

My children were going to pay for their own college like their mother and I did. Not anymore, 529s for all three. Last year I did not contribute to 401k so we could make some purchases and build an addition on the house. This year it will be maxed out.

So in other words a shit load of money out of the market and out of the tax revenue bucket from guys like me BECAUSE OF WHAT THEY ARE DOING. Not becuase of wall street greed. Not because of I don’t have confidence in an un-fucked with market. I am fully confident that wall street greed will make money. Funny you don’t hear many modern economists analyzing this? I wonder what that multiplier is?

Think about that last statement. Just take 5 minutes and think about it.

You also need to better understand GDP. What is included and what is not. GDP is not the best indicator. Actually it is one of the best we have, but still not very good. That is why one must step away from the calculator from time and time and rely on logic and reason.

This the biggest piece of shit argument. The logic behind the benefit of this fundamentally flawed. I appologize for the harsh language but this is repeated so often my feathers get ruffled every time I hear it.

If there is a multiplier for for gov’t spending money in the free market, there has to be a negative multiplier for money gov’t takes out of the market. What about interest on the dept? What about inflation. What about investor and consumer confidense dropping like a rock for every trillion they spend? Complete piece of shit argument.

[quote]
Some (e.g. Mr. Krugman) say that the multiplier is around 1.5 while others (e.g. Amity Shlaes) say its -0.2

Oh, and great argument so far. I hope you’re enjoying the discussion as much as me[/quote]

96

Opinion piece by Kudlow. Spot on.

What is missed in this discussion is the fact that the spending bill provides funding for “Work”, not jobs.

The jobs go away when the spending goes away. Jobs are created when demand is created for a good or service and a company provides it. We are kidding ourselves with creating “make work” projects and more government services which are inefficient and crowd out private investment. The Obama machine knows this too but it more interested in creating a power base from which to rule then actually helping the economy.

Ask yourself this. If Obama could preside over a growing and prosperous economy that operated completely contrary to his socialist ideals or a flat to shrinking economy that conformed to his socialist ideals and kept him in power…which would he choose. Kind of tells you why he is making the decisions he is making.

When the rest of the electorate wakes up to this agenda and rejects it they will have hell to pay.

97

[quote]shookers wrote:
katzenjammer wrote:
Actually, I spent a lot of time with The General Theory in college, and I seem to remember that Keynes at the end of his life recanted much of the theory. Does anyone else remember something about this?

He recanted not because he thought his theory was wrong, more because he realized what evils his theory could be used to Justify.

Keynes wasn’t an advocate of big government (although he is today portrayed to be), he just thought fiscal policy was a powerful tool.

When he saw the excess spending held over from the New Deal, and others who abused his theory to advance their political ends, he regretted his effect on society.

[/quote]

I’m not sure you’re correct here - I believe he also had serious questions about multiplier effect and so on.

Nevertheless, you are correct that he came to see how demand management might be (and was) abused for political (and perhaps even evil) ends - and how, especially, it created the temptation to keep spending ever increasing amounts, and continue to do so even in good times, which would lead inexorably to increasing the size of government, and crowding out private investment.

Okay, so if this is what the author of the original theory came to fear, why shouldn’t we have serious reservations about what BO is embarking upon?

98

[quote]hedo wrote:

When the rest of the electorate wakes up to this agenda and rejects it they will have hell to pay.[/quote]

Thanks, really good piece. The polls on support for his agenda seem all over the place - probably reflecting how, exactly, the polling question is asked. Here in Boston I’m surrounded by relatively wealthy liberals who are euphoric about BO and his spending. Don’t ask me why. It’s bizarre. One thing for sure - whatever happens, he’s got an enormous slush fund now with which to “bribe” huge swaths of the electorate and keep them “on the program”.

99

You mean (among other things) that the 40% of income earners who pay no income tax who will now be receiving an “income tax cut” --which translated to ordinary English means, a check which is money taken from other people and given to them by the IRS – might LIKE this and keep voting for it to continue or even expand?

100

[quote]katzenjammer wrote:
shookers wrote:
katzenjammer wrote:
Actually, I spent a lot of time with The General Theory in college, and I seem to remember that Keynes at the end of his life recanted much of the theory. Does anyone else remember something about this?

He recanted not because he thought his theory was wrong, more because he realized what evils his theory could be used to Justify.

Keynes wasn’t an advocate of big government (although he is today portrayed to be), he just thought fiscal policy was a powerful tool.

When he saw the excess spending held over from the New Deal, and others who abused his theory to advance their political ends, he regretted his effect on society.

I’m not sure you’re correct here - I believe he also had serious questions about multiplier effect and so on.

Nevertheless, you are correct that he came to see how demand management might be (and was) abused for political (and perhaps even evil) ends - and how, especially, it created the temptation to keep spending ever increasing amounts, and continue to do so even in good times, which would lead inexorably to increasing the size of government, and crowding out private investment.

Okay, so if this is what the author of the original theory came to fear, why shouldn’t we have serious reservations about what BO is embarking upon?

[/quote]

i think we should clairify what exactly is dangerous and incorrect. John Maynard is not dangerous. He has not been for some time. It is Keynesianism that is dangerous.

Regardless of what he may have thought throughout his life, the Keynesian principals as we know them are extremely dangerous.

Some may beleive Keynesianism to be an economic theory. If this were true nobody would be following it, as it has been proven incorrect or illogical decades ago.

The fact is Keynesianism is a means for political power and control that can conveniently called an economic philosophy. What Keynes intended is actually irrelavent.