REAL WORLD EVENT DISCUSSIONS

Conservatives have no ideas what to do about recessions

POSTED BY: KPO
UPDATED: Thursday, December 23, 2021 01:06
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Tuesday, December 31, 2013 9:51 AM

M52NICKERSON

DALEK!


Quote:

Originally posted by Geezer:
Nope. I get the point of Keynesian theory. Throw enough money at it and recession/depression goes away. The problem is that you can't convince folks to dig holes and bury jars of money. You need something like a war - the imminent threat of killing, destruction, bombing, gas chambers, etc. - to get people to willingly make such sacrifices and go so far into national debt. So I'm back to thinking that the Keynesian solution is to have a nice big war.



The only people you can't convince are the people who think that the government running up a debt will cause them to have to bury money. Even with that the US government has not had much problem running deficits.

The real problem is getting government spending to be reduced when the economy is good and revenues are high. That is the point government spending should shrink, but not taxes, to act as a calming force in the economy.


I do not fear God, I fear the ignorance of man.

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Tuesday, December 31, 2013 9:54 AM

BYTEMITE


Depends on what exactly you're arguing. If you mean that the war wrecked the economies of Europe and Asia and left the US the only remaining stable developed nation economy for almost 40 years, then yes, WW2 ended the depression.

But that solution strikes me as a little on the evil side of the alignment pool.

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Tuesday, December 31, 2013 10:51 AM

NEWOLDBROWNCOAT


Quote:

Originally posted by Geezer:
Quote:

Originally posted by NewOldBrownCoat:
Quote:

Originally posted by SIGNYM:


BTW GEEZER, there was a huge recovery under FDR from 1930-1936. By the spring of 1937, production, profits, and wages had regained their 1929 levels. But in 1936, the Federal Reserve had tightened the money supply, and the US Treasury had insisted in budget cuts and increased taxes to "balance the budget". As a result, the economy took a swift downturn in 1937. Your reading of the Great Depression, and the lessons to be learned from it, is superficial at best.




Thanx , Sig. That is the conventional theory of how the history went. I was gonna post that same point in refutation of Geezer, that's how I remembered learning it when I studied 20th Century history.



Unemployment right before the recession of 1937-38 was 14.3%. This is a success? Not sure how it refutes anything.




You're not listening, OldRap.

Both Sig and I are claiming that there was a signifigant recovery by 1936, out of the deepest deep and back toward better times; that in '36 policies got more conservative; and that that set off a double dip in '37, that lasted until the War. Negative stats from '37-38 kinda prove our point. And 14.% before '37 is better the millions datandin in breadlines and at soup kitcheds in '30-'32.

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Tuesday, December 31, 2013 11:11 AM

KPO

Sometimes you own the libs. Sometimes, the libs own you.


Quote:

Nope. Read wiki.

I've read Wiki. The question is not whether HH carried out some liberal policies, it's whether he and FDR carried out unrestricted Keynesian liberal policies throughout the whole of the GD. They didn't.

Quote:

Smoot-Hawley was gone by 1934. The Depression remained.


1. I don't know what your point is. Are you disputing that protectionism exacerbated the GD?
2. Things started to improve around that time (until 1937, when FDR enacted austerity)
3. One would not expect global trade to recover instantly. Viable businesses and factories had closed down, it would take time to regrow them.

Quote:

Not if you look at the actual amount of debt as shown in my cite. Actual dollars of debt went up steadily from 1929 to 1941.

Ok. Technically the budget wasn't completely balanced, but the correct economics way to look at it is debt as a % of GDP. So although debt was growing slowly, so was the economy, and so the debt burden was not growing. That's what my graph shows. And it shows that the brakes were firmly on the government spending.

Quote:

You need something like a war - the imminent threat of killing, destruction, bombing, gas chambers, etc. - to get people to willingly make such sacrifices and go so far into national debt. So I'm back to thinking that the Keynesian solution is to have a nice big war.

Ok, I think you're halfway to understanding Keynesian theory. The key point that I think you might be missing is that Keynesian economists do not really advocate wasteful spending as a solution to recessions - but rather economically useful spending. Like infrastructure investments. Imagine for e.g. if all the money of WWII was spent instead on infrastructure, education, research and development projects. How much MORE of a boost to the US economy would it have been? In the long term, as well as the short term? That's what Keynes advocates as the solution to recessions. And when you have situations like the one in the US at the moment, with a weak economy and infrastructure that desperately needs improving, stimulus spending would be a win-win. It's a complete no-brainer. And yet, because we live in a time when US politics have been dragged far to the right, desperately needed stimulus spending is not even on the agenda. Economists and historians will look back on this period of US history and pull their hair out.


It's not personal. It's just war.

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Tuesday, December 31, 2013 12:50 PM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

I read your previous post. It's pretty funny that you complain about ideologues then go on an ideological "But Bush..." rant yet again.
Bush is a historic figure; he followed a policy for eight years which precipitated the WORST recession since 1929.DO you really think we can discuss the relative merits of various policies without discussing Bush. And Keynes, Hoover, FDR, Harding, and Obama? If you do, then you're the one being the ideologue.

Quote:

And you seem to be in the same boat as KPO, deciding that if it takes a world war to end a depression, then that's a good thing. Somehow, I'm not too comfortable with that. It must be a liberal thing.
Again, read with comprehension (if at all possible). I specifically said it didn't have to be war, it's just that was was the motivation which allowed the politicians of that day to leap over their reservations about EVEN MORE government spending.

Also, the war effort wasn't just money shoveled at the top (as it is today). It provided JOBS to millions of people... men to fill out those uniforms, women at home to wrap bandages and make airplanes and tanks, farmers t provide the food.

If you keep insisting in misrepresenting me in some sort of attempt to discredit what I say, without ever actually discussing my points, this conversation will go nowhere.

So, in today's economy, OUR effort to end the recession would involve lots and lots of government jobs... let's call it the "War on Global Climate Shift". Renovate every single water/energy- inefficient home, condo, or apartment. Engage in a massive resettlement of coastal people 50' higher than they are now. Build massive north-south wildlife corridors for plants and animal to migrate northward, and pre-plant them with heat-tolerant species. Develop 1-mile-wide firebreaks through all of our national forests by thinning trees and laying down biochar. Remove invasive species. Rebuild and rehabilitate our wetlands. Put in trolleys and land-ferries (trains which carry cars to their destination)

Bring our soldiers home, and make them part of THIS effort. Raise the minimum wage. Tariff goods from environmentally-unsound nations. Raise taxes to 90% at the top level, and raise corporate taxes and eliminate tax loopholes.

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Tuesday, December 31, 2013 4:03 PM

NEWOLDBROWNCOAT


Quote:

Originally posted by SIGNYM:

So, in today's economy, OUR effort to end the recession would involve lots and lots of government jobs... let's call it the "War on Global Climate Shift". Renovate every single water/energy- inefficient home, condo, or apartment. Engage in a massive resettlement of coastal people 50' higher than they are now. Build massive north-south wildlife corridors for plants and animal to migrate northward, and pre-plant them with heat-tolerant species. Develop 1-mile-wide firebreaks through all of our national forests by thinning trees and laying down biochar. Remove invasive species. Rebuild and rehabilitate our wetlands. Put in trolleys and land-ferries (trains which carry cars to their destination)

Bring our soldiers home, and make them part of THIS effort. Raise the minimum wage. Tariff goods from environmentally-unsound nations. Raise taxes to 90% at the top level, and raise corporate taxes and eliminate tax loopholes.



Hey, I'd vote for somebody who ran on that platform. 'Course he'd only get 3 votes: mine, yours and his own; and he'd stand ZERO chance of getting elected,and zero chance of getting any of it passed, but I'd gladly march into Hell behind a banner proclaiming those goals.

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Thursday, January 2, 2014 9:47 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by M52NICKERSON:
Quote:

Originally posted by Geezer:
Nope. I get the point of Keynesian theory. Throw enough money at it and recession/depression goes away. The problem is that you can't convince folks to dig holes and bury jars of money. You need something like a war - the imminent threat of killing, destruction, bombing, gas chambers, etc. - to get people to willingly make such sacrifices and go so far into national debt. So I'm back to thinking that the Keynesian solution is to have a nice big war.



The only people you can't convince are the people who think that the government running up a debt will cause them to have to bury money. Even with that the US government has not had much problem running deficits.



Talk to KPO. He thinks that the FDR administration, despite tripling the national debt, wasn't spending enough until WWII came along and bailed the Keynesians out.

Quote:

The real problem is getting government spending to be reduced when the economy is good and revenues are high. That is the point government spending should shrink, but not taxes, to act as a calming force in the economy.


Sort'a like what Coolidge was doing after WWI. He dropped the national debt from $26 billion to $16 billion by cutting government spending and cutting taxes.


I do not fear God, I fear the ignorance of man.



"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Thursday, January 2, 2014 9:52 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by NewOldBrownCoat:
You're not listening, OldRap.

Both Sig and I are claiming that there was a signifigant recovery by 1936, out of the deepest deep and back toward better times; that in '36 policies got more conservative; and that that set off a double dip in '37, that lasted until the War. Negative stats from '37-38 kinda prove our point. And 14.% before '37 is better the millions datandin in breadlines and at soup kitcheds in '30-'32.



I'm listening to you and SignyM tell me that the liberal policies of Hoover and Roosevelt took six years to reduce unemployment to 14.3%, and that the 1936 recovery wasn't sustainable and failed. I am still not finding this persuasive proof that liberal ideas of how to end a depression/recession work all that great.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Thursday, January 2, 2014 9:53 AM

SIGNYM

I believe in solving problems, not sharing them.


Well, I just have to toss this in, not only bc it's funny but bc its' educational

Keynes versus Hayek: Fear the Boom and Bust



Keynes versus Hayek Party II: The Throwdown








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Thursday, January 2, 2014 10:14 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by kpo:
I've read Wiki. The question is not whether HH carried out some liberal policies, it's whether he and FDR carried out unrestricted Keynesian liberal policies throughout the whole of the GD. They didn't.



So it was Hoover and Roosevelt who had no idea what to do about recessions?

Quote:

Quote:

Smoot-Hawley was gone by 1934. The Depression remained.


1. I don't know what your point is. Are you disputing that protectionism exacerbated the GD?


I'm noting that protectionism was gone by 1934. The Depression continued until 1942. So Smoot-Hawley may have had an effect, but can hardly be blamed for the problems eight years later.

Quote:

2. Things started to improve around that time (until 1937, when FDR enacted austerity)


Because the Keynesians couldn't convince enough folks to bury jars of money?

Quote:

3. One would not expect global trade to recover instantly. Viable businesses and factories had closed down, it would take time to regrow them.

And this was all Smoot-Hawley's fault? Nothing else caused it?

Quote:

Quote:

Not if you look at the actual amount of debt as shown in my cite. Actual dollars of debt went up steadily from 1929 to 1941.

Ok. Technically the budget wasn't completely balanced, but the correct economics way to look at it is debt as a % of GDP. So although debt was growing slowly, so was the economy, and so the debt burden was not growing. That's what my graph shows. And it shows that the brakes were firmly on the government spending.



This graph shows Federal spending as a percent of GDP went from less than 4% in 1929 to almost 11% in 1936. Doesn't look like spending was being brakes much to me.

http://www.usgovernmentdebt.us/spending_chart_1920_1940USp_15s1li011mc
n_F0f_US_Federal_Spending


Quote:

Ok, I think you're halfway to understanding Keynesian theory. The key point that I think you might be missing is that Keynesian economists do not really advocate wasteful spending as a solution to recessions - but rather economically useful spending. Like infrastructure investments. Imagine for e.g. if all the money of WWII was spent instead on infrastructure, education, research and development projects. How much MORE of a boost to the US economy would it have been? In the long term, as well as the short term? That's what Keynes advocates as the solution to recessions. And when you have situations like the one in the US at the moment, with a weak economy and infrastructure that desperately needs improving, stimulus spending would be a win-win. It's a complete no-brainer. And yet, because we live in a time when US politics have been dragged far to the right, desperately needed stimulus spending is not even on the agenda. Economists and historians will look back on this period of US history and pull their hair out.



Folks don't reject this because politics has been dragged to the Right. They reject it because they have a perfectly understandable aversion to running up massive Federal debt - apparently debt much more massive than what we already have - in hopes of making the Keynesian prescription for recession relief work.

You and others talk about the unlikeliness of selling Libertarian philosophy to the masses. I suggest that your version of Keynesian economics would be just as hard a sell.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Thursday, January 2, 2014 10:47 AM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

I'm listening to you and SignyM tell me that the liberal policies of Hoover and Roosevelt took six years to reduce unemployment to 14.3%, and that the 1936 recovery wasn't sustainable and failed. I am still not finding this persuasive proof that liberal ideas of how to end a depression/recession work all that great.
Because you still have failed to grasp the other part of what we were saying: Government spending worked. It's just that a LOT MORE was needed than what FDR and his economic advisors anticipated, and more than what conservatives would allow. It wasn't until WWII came along and squashed the objections of the conservatives by confronting them with a such a compelling challenge (world war) that they were FORCED to spend. Also, FDR, the old dog, apparently knew that the Japanese were going to bomb Pearl Harbor and allowed it to happen, knowing that this would get the ditherers off their seats- not only in terms of spending but also in terms of confronting a world threat.

But I think Keynes doesn't have it quite right. Under Keynesian theory, pumping up the money supply is good enough. In HIS theory, it doesn't matter where the money get injected. But the reality is that economies ARE driven by demand, and unless you can boost demand you can pump all kinds of money into th wealthy class and all you will do is drive up the cost of diamonds, fine art, and yachts. And that doesn't create enough demand to power an economy.

The point I keep making is that money is like blood: It doesn't do any good unless it's circulating. The rate of exchange of money is called it's velocity]: A dollar bill can be used to power one exchange per year, or it can be used to power 1000. The higher the velocity, the more the economic activity. Adding more money to a moribund economy is a bit like infusing a corpse: unless that money is going to power purchases of goods, which powers employment, which creates further demand for more goods and services etc all you will do is bloat up the body. As long as money is being hoarded and sequestered by the wealthy, who really DON'T create demand, the stimulus will bypass the vast majority of people.

All you have to do is look at the USA and the EU for examples of what NOT to do.

The EU is an extreme example. They not only didn't do the right things, they specifically did the wrong things. The EU technocrats were extremely worried about "the value of the EU". So in response to the financial crisis (created by private banks) the EU banking technocrats did two things: (1) They did not backfill the failing banks with money from the European Central Bank (ECB) or any of the other stabilization mechanisms that they had on-hand. Instead they required that the individual national governments take up that task. (Why, I don't know, since the national governments neither borrowed the money nor wrote the laws under which the EU banks operated). And (2) They required that the national government not create additional debt (deficit spending) in order to fill bank coffers. Instead, the national governments had to take money out of their social programs ... literally, money from the mouths of the hungry... in order to prop up the banks.

The result? An economic depression which is still going on in some nations... 70% youth unemployment, sharp drops in GDP, riots, starvation, the works.

And an "economic recovery" is some nations which is creating hordes of newly-poor. So Britain, for example, altho technically in recovery is experiencing the biggest fall in individual standard of living since Victorian times.
http://www.independent.co.uk/news/uk/politics/the-poorest-pay-the-pric
e-for-austerity-workers-face-biggest-fall-in-living-standards-since-victorian-era-8991842.html



As far as the USA is concerned, let's take a look at GWB's policy to begin with: he reduced taxes and engaged in massive wartime deficit spending. Technically, that should have propelled the economy into greater activity. And it did, for a few years. The problem was, it was all based on debt, and everything GWB did concentrated more and more money into fewer and fewer hands. So the pile of bank-created money evaporated, the poor had no more $$ with which to buy, and the economy collapsed.

Obama was left to pick up the mess. He threw money at the banks, and managed SOME stimulus spending, but conservatives in Congress enventually put the brakes on more deficit spending. So The Fed (unlike the ECB) took up the slack, and backfilled all of the banks' poor investments by buying them up with real dollars, putting more $ into circulation. (Infusing the corpse.) The problem is, the $ never got to those who would have created a demand for goods and services. And, if it had, much of that money would simply have flowed to China.

The answer to ending this recession in a positive way requires several steps, which nobody is about to do:

Impose increasing tariffs on cheap-labor imports. As the "cost of doing business" equalizes, manufacturers will choose to invest here. (Instead, Obama is pushing for yet another free-trade" agreement: the TPP)

Raise the minimum wage, and index it to inflation.

Create massive jobs-programs at home. We need to prepare for global climate change and (re)invest in our environment and our infrastructure. Private industry will NEVER front that money.

Prepare for the end of the petrodollar by reducing our need for oil and gas (imported or otherwise) and boosting agricultural and manufacturing output. (Our dollar will only be worth what people can buy from the USA.)

Increase taxes on the wealthy, and eliminate corporate tax loopholes.

I've read Mises on depressions. In some ways, he and I overlap, but his fixation on gold and the "value of currency" is misguided. In the long run, a currency is worth only what you can buy with it. I know that sounds like a tautology, but for the US dollar (to be very specific) what that means is that (1) as long as the USD was required by producing nations to buy oil, that made the USD a universally vital medium of exchange, and a "world reserve currency".

With the collapse of the USD-petrodollar (it's already collapsed, it just hasn't finished falling) the USD will only be worth what others can BUY FROM US once they plunk their dollars down on the counter. Houses? Food? Manufactured goods? No amount of gold can prop up a useless currency, because once you have sold all of the gold backing your currency you'll still be left with a useless currency. In order to "back" your economy you need a vibrant manufacturing economy- something the EU and the conervatives have forgotten.

Finally- what is happening to the EU is what has happened to EVERY debtor nation under IMF regulation. The IMF has driven many nations into deep recessions thru its tight-money policies. The answer isn't necessarily "loose money" but - literally- wealth redistribution combined with increased production and investments in future productivity: infrastructure, energy, the environment, education and health.

Quote:

You and others talk about the unlikeliness of selling Libertarian philosophy to the masses. I suggest that your version of Keynesian economics would be just as hard a sell.
Most people are already FOR a raised minimum wage, single-payer health care, higher taxes in the rich, reduced military spending, and so forth. Your point being...?

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Thursday, January 2, 2014 11:05 AM

SIGNYM

I believe in solving problems, not sharing them.


GEEZER Also, government spending



I assume you see the drop in spending? So much wrongness in just a few posts, I can't even begin to address it all.

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Thursday, January 2, 2014 11:17 AM

M52NICKERSON

DALEK!


Quote:

Originally posted by Geezer:
Talk to KPO. He thinks that the FDR administration, despite tripling the national debt, wasn't spending enough until WWII came along and bailed the Keynesians out.



With the debt of the Great Depression it is very likely there was not enough spending.

Quote:

Originally posted by Geezer:
Sort'a like what Coolidge was doing after WWI. He dropped the national debt from $26 billion to $16 billion by cutting government spending and cutting taxes.



Yes, it could be argued that he should have simple cut the spending and kept the taxes near where they were to lower the debt even more and offering even more of a cooling effect.

I do not fear God, I fear the ignorance of man.

I do not fear God, I fear the ignorance of man.

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Thursday, January 2, 2014 11:23 AM

KPO

Sometimes you own the libs. Sometimes, the libs own you.


Quote:

Talk to KPO. He thinks that the FDR administration, despite tripling the national debt, wasn't spending enough


First of all, the national debt before FDR was small, so tripling it does not necessarily mean FDR spent massively. Secondly, again, look at the graph of debt/GDP -

FDR came in in 1933, and kept debt as a proportion of GDP steady. So although the debt increased in dollar amounts, FDR practiced fiscal restraint and kept the debt burden steady - against what Keynes recommended. So yes, I would say FDR didn't spend enough - the GD could've ended much sooner!

Quote:

until WWII came along and bailed the Keynesians out.

Do you have your own, non-Keynesian explanation for how WWII ended the Great Depression? If not then wouldn't it have been much better if FDR had spent massively in 1933, instead of 1941, and pulled America out of the GD sooner?

Another two points about Keynesian spending:

1. It's only ever practised when the economy is in a mess.
2. It's usually practised on a half-hearted scale, with too many people fretting about deficits

These two facts together mean that the result of stimulus spending is rarely resoundingly successful, and usually the economy will still be in a weak state afterwards (though better than it was, and would've been). So people will question whether the stimulus did anything at all. The answer is invariably yes, but the spending was not big enough.

It's not personal. It's just war.

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Thursday, January 2, 2014 11:35 AM

SIGNYM

I believe in solving problems, not sharing them.


Oh BTW- this sums up Keynes quite nicely.

http://en.wikipedia.org/wiki/Keynesian_economics

If you use Wikipedia, please donate. I do.

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Thursday, January 2, 2014 11:50 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by SIGNYM:
Because you still have failed to grasp the other part of what we were saying: Government spending worked. It's just that a LOT MORE was needed than what FDR and his economic advisors anticipated, and more than what conservatives would allow. It wasn't until WWII came along and squashed the objections of the conservatives by confronting them with a such a compelling challenge (world war) that they were FORCED to spend. Also, FDR, the old dog, apparently knew that the Japanese were going to bomb Pearl Harbor and allowed it to happen, knowing that this would get the ditherers off their seats- not only in terms of spending but also in terms of confronting a world threat.



I grasp what you and KPO are saying. I'm just appalled by it.

You're saying that a world war every once in a while is GOOD for the economy, and apparently should be encouraged, including losing lives in a 'surprise' attack you knew was coming to get those 'ditherers off their seats'. I'm surprised that you don't absolutely love Bush II for keeping us in wars for most of his term. Or maybe they just weren't big enough for you.

Quote:

But I think Keynes doesn't have it quite right. Under Keynesian theory, pumping up the money supply is good enough. In HIS theory, it doesn't matter where the money get injected. But the reality is that economies ARE driven by demand, and unless you can boost demand you can pump all kinds of money into th wealthy class and all you will do is drive up the cost of diamonds, fine art, and yachts. And that doesn't create enough demand to power an economy.


Sort'a like Storymark's cites about the income inequality arising from the Obama Administration's response to the 2008 recession?

Quote:

The point I keep making is that money is like blood: It doesn't do any good unless it's circulating. The rate of exchange of money is called it's velocity]: A dollar bill can be used to power one exchange per year, or it can be used to power 1000. The higher the velocity, the more the economic activity. Adding more money to a moribund economy is a bit like infusing a corpse: unless that money is going to power purchases of goods, which powers employment, which creates further demand for more goods and services etc all you will do is bloat up the body. As long as money is being hoarded and sequestered by the wealthy, who really DON'T create demand, the stimulus will bypass the vast majority of people.


Interesting that what you see as 'hoarded and sequestered' I see as invested. I'm assuming that your method of getting money moving would be to take it from those more well off and start a new version of the CCC to distribute it to those less well off. (Oh. As I read farther I see that it is)

Quote:

The EU is an extreme example. They not only didn't do the right things, they specifically did the wrong things. The EU technocrats were extremely worried about "the value of the EU". So in response to the financial crisis (created by private banks) the EU banking technocrats did two things: (1) They did not backfill the failing banks with money from the European Central Bank (ECB) or any of the other stabilization mechanisms that they had on-hand. Instead they required that the individual national governments take up that task. (Why, I don't know, since the national governments neither borrowed the money nor wrote the laws under which the EU banks operated). And (2) They required that the national government not create additional debt (deficit spending) in order to fill bank coffers. Instead, the national governments had to take money out of their social programs ... literally, money from the mouths of the hungry... in order to prop up the banks.


But isn't backing up the banks an example of Keynesian interventionism? Sort'a like this?

http://www.beyondthemargin.net/2009/09/keynesian-economics.html


Quote:

As far as the USA is concerned, let's take a look at GWB's policy to begin with: he reduced taxes and engaged in massive wartime deficit spending. Technically, that should have propelled the economy into greater activity. And it did, for a few years. The problem was, it was all based on debt, and everything GWB did concentrated more and more money into fewer and fewer hands. So the pile of bank-created money evaporated, the poor had no more $$ with which to buy, and the economy collapsed.

Obama was left to pick up the mess. He threw money at the banks, and managed SOME stimulus spending, but conservatives in Congress enventually put the brakes on more deficit spending. So The Fed (unlike the ECB) took up the slack, and backfilled all of the banks' poor investments by buying them up with real dollars, putting more $ into circulation. (Infusing the corpse.) The problem is, the $ never got to those who would have created a demand for goods and services. And, if it had, much of that money would simply have flowed to China.



So when Bush created debt through deficit spending it was BAD, but when Obama created debt through deficit spending it was GOOD and should have been allowed to continue. No ideologues here.


Quote:

The answer to ending this recession in a positive way requires several steps, which nobody is about to do:

Impose increasing tariffs on cheap-labor imports. As the "cost of doing business" equalizes, manufacturers will choose to invest here. (Instead, Obama is pushing for yet another free-trade" agreement: the TPP)



But...But... KPO blamed tariffs, specifically Smoot-Hawley, for worsening the Great Depression. And wouldn't tariffs be more a conservative thing?

Quote:

Raise the minimum wage, and index it to inflation.


And the price of everything goes up. Not saying this is a bad thing, but its something of which you need to be aware.

Quote:

Create massive jobs-programs at home. We need to prepare for global climate change and (re)invest in our environment and our infrastructure. Private industry will NEVER front that money.


Most infrastructure work now requires workers with much better technical skills than when my dad ran a CCC camp in Tenn. in the 30's. Then you could stick a kid behind a shovel or wheelbarrow and get something accomplished. Folks now have to be able to operate heavy equipment, weld, etc. So you have to have a massive jobs training program before work starts, and a massive increase in technical education schools before that.

Again, not saying this would be a bad thing, but it's not as easy as "get to work, guys".

Quote:

Prepare for the end of the petrodollar by reducing our need for oil and gas (imported or otherwise) and boosting agricultural and manufacturing output. (Our dollar will only be worth what people can buy from the USA.)

Got no problem with decreasing need for oil and gas, but still think it'll take a long time to accomplish, especially if you want to boost agriculture (which is particularly oil-dependent) at the same time. I might also point out that if we impose manufacturing tariffs on other countries, I'd bet they'll impose agricultural tariffs on us. Then we got lots of food we can't sell.

Quote:

Increase taxes on the wealthy, and eliminate corporate tax loopholes.


Saw that coming.

Quote:

Quote:

You and others talk about the unlikeliness of selling Libertarian philosophy to the masses. I suggest that your version of Keynesian economics would be just as hard a sell.
Most people are already FOR a raised minimum wage, single-payer health care, higher taxes in the rich, reduced military spending, and so forth. Your point being...?




My point being that 'a raised minimum wage, single-payer health care, higher taxes in the rich, reduced military spending, and so forth' isn't what you and KPO have been selling here. You're selling deficit spending at massive rates, preferably powered by world war.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Thursday, January 2, 2014 12:02 PM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by M52NICKERSON:
Quote:

Originally posted by Geezer:
Sort'a like what Coolidge was doing after WWI. He dropped the national debt from $26 billion to $16 billion by cutting government spending and cutting taxes.



Yes, it could be argued that he should have simple cut the spending and kept the taxes near where they were to lower the debt even more and offering even more of a cooling effect.




Checking here...
http://www.usgovernmentrevenue.com/breakdown_1929USmt_15ms1n

...total government revenue, even with tax cuts, went up every year from 1923 to 1929. Tax cuts put more money in circulation so income (and income taxes), government fees, etc. went up.

As noted before, during this period the national debt was also reduced by more than a third.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Thursday, January 2, 2014 12:33 PM

KPO

Sometimes you own the libs. Sometimes, the libs own you.


Quote:

So it was Hoover and Roosevelt who had no idea what to do about recessions?

They both did poorly. This shouldn't be a surprise - we're talking about the Great Depression here. A lot of FDR's policies promoted long term growth, which was good, but not the short term growth that was needed.

Quote:

So Smoot-Hawley may have had an effect

Good. So no more talk about '10 years of liberal policies', as if there are no other variables.

Quote:

Quote:
2. Things started to improve around that time (until 1937, when FDR enacted austerity)


Because the Keynesians couldn't convince enough folks to bury jars of money?


That's a foolish statement, and a non sequitur.

Quote:

And this was all Smoot-Hawley's fault? Nothing else caused it?

If you owned an export business then yes, it's likely that Smoot-Hawley killed your factory. But the only person blaming the GD on a single factor is yourself, Geezer. I'm saying there are many factors.

Quote:

This graph shows Federal spending as a percent of GDP went from less than 4% in 1929 to almost 11% in 1936. Doesn't look like spending was being brakes much to me.

http://www.usgovernmentdebt.us/spending_chart_1920_1940USp_15s1li011mc
n_F0f_US_Federal_Spending


Nice graph. Yes spending went up, BUT revenues increased at about the same rate. So the government was putting money into the economy at about the same rate that it was taking it out. Not what Keynesianism calls for. As I said, the US was being fiscally neutral at a time when Keynes called for deficit spending

Quote:

You and others talk about the unlikeliness of selling Libertarian philosophy to the masses. I suggest that your version of Keynesian economics would be just as hard a sell.

I don't recall saying that about Libertarianism, but regarding Keynesian economics - absolutely! People have an emotional reaction to it. They're offended by it. That doesn't mean it's wrong though.

It's a question of the lesser of two evils. Ramping up the debt and paying it back later when the economy is healthy, or keeping the economy in the doldrums, and leaving millions unemployed and in hardship.

Quote:

I grasp what you and KPO are saying. I'm just appalled by it.

You're saying that a world war every once in a while is GOOD for the economy


You apparently don't have a clue what we're saying.

Quote:

So when Bush created debt through deficit spending it was BAD, but when Obama created debt through deficit spending it was GOOD

SignY, M52, do either of you want to take this or shall I?

Quote:

But...But... KPO blamed tariffs

KPO and Signy are two different people...

Quote:

...total government revenue, even with tax cuts, went up every year from 1923 to 1929. Tax cuts put more money in circulation

The economy grew. Don't jump to conclusions that this was down to tax cuts.

It's not personal. It's just war.

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Thursday, January 2, 2014 12:38 PM

M52NICKERSON

DALEK!


Quote:

Originally posted by Geezer:
Quote:

Originally posted by M52NICKERSON:
Quote:

Originally posted by Geezer:
Sort'a like what Coolidge was doing after WWI. He dropped the national debt from $26 billion to $16 billion by cutting government spending and cutting taxes.



Yes, it could be argued that he should have simple cut the spending and kept the taxes near where they were to lower the debt even more and offering even more of a cooling effect.




Checking here...
http://www.usgovernmentrevenue.com/breakdown_1929USmt_15ms1n

...total government revenue, even with tax cuts, went up every year from 1923 to 1929. Tax cuts put more money in circulation so income (and income taxes), government fees, etc. went up.

As noted before, during this period the national debt was also reduced by more than a third.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."



Okay, but that has little to do with Keynesian economics. If does not matter how much or how little the government debt is. What matter is how much money the government is puting into the economy as opposted to how much it is talking out.

Had government spending been lower, and taxes stayed high the economy of the 20's may not have been as roaring but it might have helped prevent the Great Depression.

I do not fear God, I fear the ignorance of man.

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Thursday, January 2, 2014 12:47 PM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

I grasp what you and KPO are saying. I'm just appalled by it.
And yet, you're not appalled by the fact that the top 1% of our population take in more than the bottom 50% of total national income? Why not?



Quote:

You're saying that a world war every once in a while is GOOD for the economy
No, we're saying that the spending required to re-ignite the economy would need to be the EQUIVALENT OF a war. I even lined out an entire spending program which... amazingly... has not one war in it! Despite the fact that we have REPEATEDLY said... over and over... that war per se is not the answer, why do you keep insisting that is our goal? Please DON'T BRING THIS UP AGAIN, or you will look like even more of a tool than you already do.

Quote:

Interesting that what you see as 'hoarded and sequestered' I see as invested.
Just because the wealthy have money piled somewhere doesn't mean it's being "invested" in economically productive ventures. Not sure if you know this, but the wealthy are "investing" their money either in already-produced unique items (diamonds, gold, Bitcoins, fine art) or in futures/ hedge funds. This is part of a complex discussion about what happens to "savings", already addressed by Keynes and other economists.

Quote:

But isn't backing up the banks an example of Keynesian interventionism? Sort'a like this?
No. The main point of Keynesianism is to increase the money supply. If all you're doing to back up the banks is to take money from somebody else, that's not part of the plan.

Quote:

So when Bush created debt through deficit spending it was BAD, but when Obama created debt through deficit spending it was GOOD and should have been allowed to continue. No ideologues here.
No, you missed the point (again). When Bush created debt thru government spending and increased the wealth gap, that was bad. When Obama created debt through government spending and provided long-term unemployment, that was good. However, since he hasn't been able to reduce the wealth gap, he hasn't made any progress. The seeds of the next recession/ depression are still with us.

Quote:

But...But... KPO blamed tariffs, specifically Smoot-Hawley, for worsening the Great Depression. And wouldn't tariffs be more a conservative thing?
KPO and I don't agree on everything. Indeed, I don't agree with Keynes 100% either, but I agree with him a lot more than almost any other economist.

Quote:

Got no problem with decreasing need for oil and gas, but still think it'll take a long time to accomplish, especially if you want to boost agriculture (which is particularly oil-dependent) at the same time. I might also point out that if we impose manufacturing tariffs on other countries, I'd bet they'll impose agricultural tariffs on us. Then we got lots of food we can't sell.
In a tit-for-tat trade war, we'd come out ahead.

Quote:

And the price of everything goes up. Not saying this is a bad thing, but its something of which you need to be aware.
Not if you increase production at the same time. That is the OTHER part of my plan: Increase production (manufacturing specifically).

Quote:

Saw that coming. [Increase taxes on the wealthy, and eliminate corporate tax loopholes.]
And so...?? During our most economically prosperous times, the highest marginal tax rate was 90%. Other than your knee-jerk reaction, do you have a specific objection?

Quote:

My point being that 'a raised minimum wage, single-payer health care, higher taxes in the rich, reduced military spending, and so forth' isn't what you and KPO have been selling here. You're selling deficit spending at massive rates, preferably powered by world war.
Are you being stupid on purpose? The point of raising taxes is to reduce the deficit. And neither of us in interested in world war. That seems to be a GOP thing, or a Geezer fixation. But then, you've never met a war you didn't like. You've ALWAYS managed to defend out little "interventions", haven't you? Must be a Geezer thing.

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Thursday, January 2, 2014 12:56 PM

NEWOLDBROWNCOAT


Quote:

Originally posted by SIGNYM:

The point I keep making is that money is like blood: It doesn't do any good unless it's circulating.



The Dolly Levi Gallagher Theory of Economics: "As my late husband Ephriam used to say, Money is like manure. It doesn't do any good until you spread it around."

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Thursday, January 2, 2014 1:50 PM

FREMDFIRMA


Quote:

Originally posted by SIGNYM:
Oh BTW- this sums up Keynes quite nicely.

http://en.wikipedia.org/wiki/Keynesian_economics

If you use Wikipedia, please donate. I do.


I have a better and more accurate description, Courtesy of Michael Rivero.
(Reprinted with express permission)
Quote:

THE ELEVENTH MARBLE

by Michael Rivero

Any five-year old child knows that if you put ten marbles into a tin can, you can only take ten marbles back out. No amount of wishful thinking, dreaming, or praying, will yield that eleventh marble from inside that can. That eleventh marble does not exist. It never did, and it never will. All discussions about the eleventh marble are the product of imagination. The eleventh marble is a fantasy.

Private central bankers issuing the public currency as interest-bearing loans operate on the belief that they can put ten marbles (dollars) into a tin can (the world) and magically get 11 marbles back out. Thus, we may conclude that the bankers are dumber than five-year old children! But unlike five-year old children, the bankers will take your home, your business, and your nation when they don't get that eleventh marble! The spoiled child may cry and throw a tantrum, but that will be the end of their upset. The spoiled banker, however, in his or her arrogant rage that they cannot have the eleventh marble their imagination says must still be in that tin can, may start a war before they will admit that eleventh marble was never really there.

Economies are like tin cans. Before you can take a marble out, you must have put a marble in. Nobody can give you a marble that does not exist, yet this simple reality is lost to the priests of that fantastic religion called "economics" in that unholiest of temples called the Private Central Bank. Their religious doctrine seems to be that there must always be an eleventh marble inside the tin can, and that the tin can unfairly withholds that eleventh marble, indeed cheats them of their right to the eleventh marble, purely out of spite. That faith in the existence of the eleventh marble, unseen and improvable, is the article of faith the religion of banking rests on. It is far easier to burn the heretics than to question the dogma.

Today we see the bankers, having already retrieved their ten marbles from the tin can, flogging the world for that missing eleventh marble. Greece does not have that eleventh marble, so they turn to Germany and ask, "Do you have an eleventh marble", and Germany replies, "Sorry, but the bankers already took the ten marbles they put in our tin can, and we are searching for an eleventh marble ourselves. Try the Americans." The Americans, of course, have only just surrendered the last of their ten marbles back to the bankers and are looking under seat cushions for that missing eleventh marble nobody seems able to find.

But the eleventh marble will never be found. After all that mayhem brought down on the tin can there still will be no eleventh marble. It does not exist. It never did, and it never will.

The problem with all modern reserve banking systems is that the moment the first bank note goes into circulation as the proceed of a loan at interest, more money is owed to the banks than actually exists. Ten marbles have been put into the tin can, but the bankers see 11 marbles owed back to them. Sooner or later the non-existence of that eleventh marble will create a crisis of faith. People will stop believing in the religion called private central banking, and that crisis of faith will bring the system crashing down, as did the Temple of Baal in ancient times when the Syrians saw through the priests' trickery. This evil magic of creating money out of debt was a fraud all along, as fraudulent and silly as the idea that one can put ten marbles into a tin can, and take out eleven.

In ages to come economists will look back at this failed experiment in debt-based currency, and dump it into the same category of human folly as Tulip mania, The Nation of Poyais, Credit Mobilier, the Great South Seas Company, and Mortgage-Backed Securities.


-F

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Thursday, January 2, 2014 2:05 PM

M52NICKERSON

DALEK!


Quote:

Originally posted by FREMDFIRMA:
I have a better and more accurate description, Courtesy of Michael Rivero.
(Reprinted with express permission)
Quote:

THE ELEVENTH MARBLE

-F



The eleventh marble does not describe Keynesian economics. Hell it does not even discribe economics based on fiat currency. With fiat currency the government can create the eleventh marble out of nothing. That is kinda the point of Keyes, for the government to spend/create money to prvent the problem from not having the eleventh marble.

I do not fear God, I fear the ignorance of man.

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Thursday, January 2, 2014 3:35 PM

MAL4PREZ


Quote:

Originally posted by SIGNYM:
A dollar bill can be used to power one exchange per year, or it can be used to power 1000. The higher the velocity, the more the economic activity. Adding more money to a moribund economy is a bit like infusing a corpse: unless that money is going to power purchases of goods, which powers employment, which creates further demand for more goods and services etc all you will do is bloat up the body. As long as money is being hoarded and sequestered by the wealthy, who really DON'T create demand, the stimulus will bypass the vast majority of people.



This is the heart of it.

A restaurant owner doesn't hire more staff because he/she suddenly has extra money lying around and figures: "Hey, I'll create jobs so I can share this!" The owner hires more staff when there are more customers. It's just so obvious.

Really, the trickle down idea is so blatantly wrong and has so hideously failed that I'm at a loss how anyone can still attempt to argue for it.

That's about all I have to add, since I lack the language to go into detail about economics. Enjoying the posts though.

Oh - the 11 marbles thing seems overly simple. Sure, I hate how our economy is largely controlled by those who make money from money, rather than actually doing or making something useful. But economics is not about counting stationary marbles. It's about how the marbles move about.




*-------------------------------------------------------------*
MAL4PREZ: Clearly [The Rap]'s doing nothing but trolling now.
STORYMARK: And not even cleverly.
RAPPY: [My trolling] did its job, did it not? Easiest marks in the 'verse.
http://www.fireflyfans.net/mthread.aspx?bid=18&tid=57146
*-------------------------------------------------------------*

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Thursday, January 2, 2014 11:53 PM

FREMDFIRMA



Simplistic it may be, but the relevance of it here is that the Banksters hoard the marbles they have until they've picked the country clean and then start to squeeze, looking for the 11th one, and that almost inevitably leads to serious nasty.

As for the complete shell game of how the marbles move around, Sheldon Emry did a pretty good assessment on this.
http://liberty-tree.ca/research/Billions.for.the.Bankers
Mind you this has snowballed as more and more "money" is naught more than etheral and easily manipulated numbers in electronic banking systems.

And if you REALLY want to get into the very devil of the details, this RSA primer on why this bullshit is inevitable in a Capitalistic system is a pretty good breakdown.



Worth a note as well, I consider the so-called-science of Economics to be complete bullshit, a semi-religious pseudoscientific load of horseshit used as excuse/explaination/justification for the practice of usury in malicious fashion, cause just like that old shoveljob about how we all need a leash to protect us from ourselves, those espousing it (outside of fools taught it in school who never learned better/different) have nefarious intentions for advancing such a dangerous and destructive myth.

-Frem

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Friday, January 3, 2014 12:04 AM

SIGNYM

I believe in solving problems, not sharing them.


One of these days economics might become a real science, but right now all it is is a long apologia for TPTB. Propaganda, masquerading as fact.

My take on it is not that 11th marble reflects Keynesianism, it reflects the problem Keynes was trying to solve.

Well, now that we're all (mostly) in agreement that conservatives have no ideas what to do about recessions, it seems to me that the trick is to figure out a system where money CAN'T get stuck in dead-ends. The problem that a lot of ppl have is the idea that money (and power) don't behave like water... money and power don't diffuse, don't flow from high concentrations to low. In fact, they naturally concentrate. Unless you have a system actively dispersing/ diffusing both, you'll wind up with what we have today.

The FF tried to do that with politics. They scattered power via the vote, and set up checks and balances between three competing systems. But they didn't imagine how money could concentrate.

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Friday, January 3, 2014 6:43 AM

FREMDFIRMA



Ha, simple solution.

Perishable Currency.

Bonus points if it's edible.

-F

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Friday, January 3, 2014 7:57 AM

M52NICKERSON

DALEK!


Quote:

Originally posted by FREMDFIRMA:

Simplistic it may be, but the relevance of it here is that the Banksters hoard the marbles they have until they've picked the country clean and then start to squeeze, looking for the 11th one, and that almost inevitably leads to serious nasty.

As for the complete shell game of how the marbles move around, Sheldon Emry did a pretty good assessment on this.
http://liberty-tree.ca/research/Billions.for.the.Bankers
Mind you this has snowballed as more and more "money" is naught more than etheral and easily manipulated numbers in electronic banking systems.

And if you REALLY want to get into the very devil of the details, this RSA primer on why this bullshit is inevitable in a Capitalistic system is a pretty good breakdown.

Worth a note as well, I consider the so-called-science of Economics to be complete bullshit, a semi-religious pseudoscientific load of horseshit used as excuse/explaination/justification for the practice of usury in malicious fashion, cause just like that old shoveljob about how we all need a leash to protect us from ourselves, those espousing it (outside of fools taught it in school who never learned better/different) have nefarious intentions for advancing such a dangerous and destructive myth.

-Frem



Emry states that the Great Depression was the result of bankers rufusing to issue new loans. She is making this up. The fact is the huge economic success of the twenties saw bank loans being paid off. In responce the banks lowered interest rates in encourage people to take out new loans. They did, which grew to a unsutainable level. Couple this with some housing market bubbles and suddenly banks are trying to call in loans because they are over extended, people can't pay the loans because they don't have the money and the system sprials out of control.

It's funny that you think economics is bullshit, but post an article that accuses bankers of using simple economics to control people.

I do not fear God, I fear the ignorance of man.

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Friday, January 3, 2014 10:28 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by kpo:
First of all, the national debt before FDR was small, so tripling it does not necessarily mean FDR spent massively. Secondly, again, look at the graph of debt/GDP -


FDR came in in 1933, and kept debt as a proportion of GDP steady. So although the debt increased in dollar amounts, FDR practiced fiscal restraint and kept the debt burden steady - against what Keynes recommended. So yes, I would say FDR didn't spend enough - the GD could've ended much sooner!



So national debt going from 18% of GNP in 1929 to 45% in 1939 is fiscal restraint? Just curious as to how much national debt as a percent of GNP you think is acceptable.



Quote:

Quote:

until WWII came along and bailed the Keynesians out.

Do you have your own, non-Keynesian explanation for how WWII ended the Great Depression? If not then wouldn't it have been much better if FDR had spent massively in 1933, instead of 1941, and pulled America out of the GD sooner?



My point is that it you are claiming that it takes something along the lines of a world war for the Keynesian remedy for depression to work. At that point it seems that the cure is worse than the disease.

Quote:

Another two points about Keynesian spending:

1. It's only ever practised when the economy is in a mess.
2. It's usually practised on a half-hearted scale, with too many people fretting about deficits

These two facts together mean that the result of stimulus spending is rarely resoundingly successful, and usually the economy will still be in a weak state afterwards (though better than it was, and would've been). So people will question whether the stimulus did anything at all. The answer is invariably yes, but the spending was not big enough.



That's because most folks have a very understandable aversion to running up massive national debt in the hope that Lord Keynes will come down from heaven and bail them out.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Friday, January 3, 2014 10:40 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by kpo:
Quote:

So it was Hoover and Roosevelt who had no idea what to do about recessions?

They both did poorly. This shouldn't be a surprise - we're talking about the Great Depression here. A lot of FDR's policies promoted long term growth, which was good, but not the short term growth that was needed.



Yep. Need a good war to make Keynes work.

Quote:

[]b
Quote:

So Smoot-Hawley may have had an effect

Good. So no more talk about '10 years of liberal policies', as if there are no other variables.


Apparently there are no policies (short of world war) that are liberal enough for you.

Quote:

Quote:

Quote:
2. Things started to improve around that time (until 1937, when FDR enacted austerity)


Because the Keynesians couldn't convince enough folks to bury jars of money?


That's a foolish statement, and a non sequitur.



Why? You proposed it. "Keynes proposed that a government could theoretically spend money digging holes in the ground, and then burying jars of banknotes inside, and then leave it to private enterprise to dig up the jars of money for their own profit - and that this would boost employment, and the economy."

But you couldn't sell that to the populace, so WWII was the alternative.

Quote:

Quote:

And this was all Smoot-Hawley's fault? Nothing else caused it?

If you owned an export business then yes, it's likely that Smoot-Hawley killed your factory. But the only person blaming the GD on a single factor is yourself, Geezer. I'm saying there are many factors.



Where did I say there was a single factor causing the GD?

Quote:

Quote:

This graph shows Federal spending as a percent of GDP went from less than 4% in 1929 to almost 11% in 1936. Doesn't look like spending was being brakes much to me.

http://www.usgovernmentdebt.us/spending_chart_1920_1940USp_15s1li011mc
n_F0f_US_Federal_Spending


Nice graph. Yes spending went up, BUT revenues increased at about the same rate. So the government was putting money into the economy at about the same rate that it was taking it out. Not what Keynesianism calls for. As I said, the US was being fiscally neutral at a time when Keynes called for deficit spending



Graphs above show national debt going up during the 1929-1939 period, so revenues did not increase at the same rate as spending.

Quote:

You're saying that a world war every once in a while is GOOD for the economy

You apparently don't have a clue what we're saying.


Do you?

"I'm telling you that this is exactly the role WWII played for the US economy. The US didn't put people to work digging holes in the ground and filling them in, but it did employ millions in the US military, and put them to work shooting and bombing Nazis and Japanese. The US didn't bury money for private companies to dig up, but it did give billions of $$$ of war materials/munitions contracts to US factories."




"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Friday, January 3, 2014 10:45 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by M52NICKERSON:
Okay, but that has little to do with Keynesian economics. If does not matter how much or how little the government debt is. What matter is how much money the government is puting into the economy as opposted to how much it is talking out.



I thought one of the cornerstones of Keynes was high government (deficit) spending. More spending was one of the liberal ideas for ending recession stated in the cite from the original post.

Quote:

Had government spending been lower, and taxes stayed high the economy of the 20's may not have been as roaring but it might have helped prevent the Great Depression.


If I used "might" and "may not" like that, people would call me names. I'll just ask for a cite.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Friday, January 3, 2014 10:59 AM

M52NICKERSON

DALEK!


Quote:

Originally posted by Geezer:
I thought one of the cornerstones of Keynes was high government (deficit) spending. More spending was one of the liberal ideas for ending recession stated in the cite from the original post.



Yes, during recessions Keynes call for government spending to go up to keep people employeed. The spending is the important part, the deficit part narually comes along for the ride and is a result of the spending but not part of what helps.

Quote:

Originally posted by Geezer:
If I used "might" and "may not" like that, people would call me names. I'll just ask for a cite.



http://www.thegreatdepressioncauses.com/facts-about-causes-of-the-grea
t-depression.html


http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression

I do not fear God, I fear the ignorance of man.

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Friday, January 3, 2014 11:16 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by SIGNYM:
No, we're saying that the spending required to re-ignite the economy would need to be the EQUIVALENT OF a war. I even lined out an entire spending program which... amazingly... has not one war in it! Despite the fact that we have REPEATEDLY said... over and over... that war per se is not the answer, why do you keep insisting that is our goal? Please DON'T BRING THIS UP AGAIN, or you will look like even more of a tool than you already do.



The reason I keep bringing this up is that you are more likely to have a good-sized war than you are to implement the spending programs you propose. Even what KPO considers a pretty lackluster program by FDR during the Great Depression ran into pretty strong opposition, including from his own party. If you propose a solution based on events that are really unlikely to happen, it seems only fair that I should point this out.


Quote:

Just because the wealthy have money piled somewhere doesn't mean it's being "invested" in economically productive ventures. Not sure if you know this, but the wealthy are "investing" their money either in already-produced unique items (diamonds, gold, Bitcoins, fine art) or in futures/ hedge funds. This is part of a complex discussion about what happens to "savings", already addressed by Keynes and other economists.


Anecdotal. Cites?

Quote:

In a tit-for-tat trade war, we'd come out ahead.


Didn't work in Smoot-Hawley. Any reason to expect different now?

Quote:

Quote:

And the price of everything goes up. Not saying this is a bad thing, but its something of which you need to be aware.
Not if you increase production at the same time. That is the OTHER part of my plan: Increase production (manufacturing specifically).



But increased production only works if you have increased demand. I can make all the blivits I want, but if the blivit market isn't there, I got a lot of leftover blivits.

Quote:

Quote:

Saw that coming. [Increase taxes on the wealthy, and eliminate corporate tax loopholes.]
And so...??



So nothing. Just a comment.

Quote:

Quote:

My point being that 'a raised minimum wage, single-payer health care, higher taxes in the rich, reduced military spending, and so forth' isn't what you and KPO have been selling here. You're selling deficit spending at massive rates, preferably powered by world war.
Are you being stupid on purpose? The point of raising taxes is to reduce the deficit. And neither of us in interested in world war. That seems to be a GOP thing, or a Geezer fixation. But then, you've never met a war you didn't like. You've ALWAYS managed to defend out little "interventions", haven't you? Must be a Geezer thing.



Until you can come up with a way of convincing the majority of people to go along with the very expensive program of spending, tariffs, civil service job creation, and taxes you proposed above as the cure for recession/depression, war is the only way you have to reach the massive amounts of spending you seem to think are required to end them. Insulting me does not change this.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Friday, January 3, 2014 11:25 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by M52NICKERSON:
Yes, during recessions Keynes call for government spending to go up to keep people employeed. The spending is the important part, the deficit part narually comes along for the ride and is a result of the spending but not part of what helps.



But you generally do end up with a deficit, which has to be paid off at some point, or uncertainty about the ability of the government to remain solvent arises.

Quote:

Quote:

Originally posted by Geezer:
If I used "might" and "may not" like that, people would call me names. I'll just ask for a cite.



http://www.thegreatdepressioncauses.com/facts-about-causes-of-the-grea
t-depression.html


http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression




Not sure I see much in these to support "Had government spending been lower, and taxes stayed high the economy of the 20's may not have been as roaring but it might have helped prevent the Great Depression."

More to the point is the lead of the wiki article.

"The causes of the Great Depression in the early 20th Century are a matter of active debate among economists..."

Seems to be a matter of active debate on RWED as well.



"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Friday, January 3, 2014 11:36 AM

SIGNYM

I believe in solving problems, not sharing them.


GEEZER, before you get all apoplectic about Federal debt, and before everyone gets focused on the government, I want to re-introduce something that every seems to have forgotten.

As far as I can tell, the largest inflator of USD is the investment banks. They have - literally- 10 times as much money in hedge funds as there are assets throughout the entire world. Domestic banks, too, have a license to "print money"- by the rules of the FDIC they are allowed to loan out approximately 10X as much money as they actually have on hand.

Since almost ALL money exists in one bank account or another, and banks are free (under current laws) to loan out far more than they have on-hand, banks have proved to be very capable of expanding the US money supply by a factor of five- or more. All of this non-government money-printing tends to go under the radar.

This excessive speculative lending (on real estate, and then stocks in 1929; and on subprime mortgages in 2000-2007) inflated the money supply, and that inflation completely bypassed government spending controls bc the government wasn't even part of it.

If you want to stop bubbles before they start, you NEED to require that banks have a LOT MORE money on-hand as part of their lending practices, and also that they define their asset classes in something other than fantasmic terms (how do you value your loan or bond portfolio when their prices are gyrating? "Mark to market"? "Mark to maturity"?)

Anyway, will be busy today. Just wanted to point out that the Federal budget is not the main money-supply-expander, it's the banks.

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Friday, January 3, 2014 1:30 PM

M52NICKERSON

DALEK!


Quote:

Originally posted by Geezer:
But you generally do end up with a deficit, which has to be paid off at some point, or uncertainty about the ability of the government to remain solvent arises.



Deficits would get paid down when the economy is doing well. I covered that already. Please try and follow along. Second you really need to understand that governments using their own issued fiat currency can't go insolvent.

Quote:

Originally posted by Geezer:
Not sure I see much in these to support "Had government spending been lower, and taxes stayed high the economy of the 20's may not have been as roaring but it might have helped prevent the Great Depression."



Okay I will spoon feed you. Look at the Specific theories of cause section. It talks about how lending increased as interest rates fell. They fell because people were paying off thier debts and the banks needed to make loans more appealing. If the economy had not grown as fast as it had in the twenty loans would have stayed more stable as people would not have paid down thier debts and banks would not have looked to lower interest rates.

You also had productivity shock which again stemmed from the economic growth in the twenty. The heavy flow of money in the twenty and the easy of finding investors ment that production skyrocketed. That caused a flood of stock and a fall in prices.

Look at an of the explantions you want and will find that they all have one thing in common, a tie into the rapid growth of the economy of the twenties.

I do not fear God, I fear the ignorance of man.

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Friday, January 3, 2014 1:43 PM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

The reason I keep bringing this up is that you are more likely to have a good-sized war than you are to implement the spending programs you propose.
Well, that is your supposition, but not our proposal. So don't keep saying that KPO and I think that was is the answer. War is YOUR answer.

AFA getting stimulus spending thru, I think a lot of ppl already recognize that much of our infrastructure is well past its safe lifespan, that our health care system is a clusterfuck, that a lot of big jobs need doing. Where they are stymied is not at the level of "the people" (because polls show that people support spending on specific programs) but at the level of "Congress".

Quote:

Not sure if you know this, but the wealthy are "investing" their money either in already-produced unique items (diamonds, gold, Bitcoins, fine art) or in futures/ hedge funds. This is part of a complex discussion about what happens to "savings", already addressed by Keynes and other economists. -signy

Anecdotal. Cites? -geezer



Oh, this is all over the economic news. Chinese wealthy are buying a crapload of gold, wine, art, vehicles, etc. The EU wealthy are buying up gold, art, diamonds, mansions. The mix varies from year to year (one year its art, the next year its Bitcoin) but speculation is definitely the ongoing game:

DEMAND FOR ALL TYPES OF INVESTMENTS OF PASSION GREW IN 2010
Quote:

Individual preferences play a large part in HNWIs’ (High Net Worth Individuals) decisions to commit to investments of passion, especially given emotive variables such as aesthetic value and lifestyle/status appeal. But HNWIs also view many investments of passion as alternative vehicles for preserving and appreciating their capital over time, diversifying their portfolio exposure or even capturing short-term speculative gains.
As wealth levels rebounded in 2010, interest in all forms of investments of passion also revived. HNWIs’ relative allocations to those investments changed very little from 2009, but new and growing demand was discernible from emerging markets. The following were among the developments in major categories of investments of passion in 2010:

Luxury Collectibles (e.g., luxury automobiles, boats, jets) remained the largest single segment (29%) of investments of passion. Demand for luxury cars rebounded broadly in 2010, but especially from emerging economies in Asia-Pacific, Russia, and the Middle East. Mercedes-Benz, for example, said its worldwide sales rose 15% in 2010, while sales in China including Hong Kong jumped 112% and sales in other emerging markets including India, Brazil, and Russia also rose sharply. Ferrari reported China sales in 2010 were up nearly 50% from 2009, its best ever year. Ferrari added that the “Greater China Area” (including Hong Kong and Taiwan) is now one of its top five international markets.

Art accounted for 22% of investments of passion overall, but that share was higher among European HNWIs (27%) and highest among Latin American HNWIs (28%). Art is also most likely to be seen as a form of financial investment. In fact, 42% of Advisors say they believe their HNW clients invest in Art primarily for its potential to gain value. While it is hard to generalize about Art values, auctions in early 2010 certainly
generated headlines when two world records were broken for artworks sold at auction —first a Giacometti painting sold for US$104.3 million in February, then a Picasso sold for US$106.5 million in May. Later auctions were less ebullient, but auction houses report demand remains strong for high-quality pieces. Newly wealthy Chinese buyers are widely reported to be keen bidders and buyers at galleries and auction houses, especially to acquire the fast-diminishing supply of works from native artists. In April 2010, “Bright Road” by Liu Ye, a contemporary Chinese artist, was auctioned for US$2.45 million, almost three times the pre-auction estimate. That sale was part of a Sotheby’s auction of contemporary Asianart, which yielded US$18.7 million, topping the pre-auction estimate by about US$2.5 million. Chinese demand is also reported to be strong for European art and Fine Arts, and Chinese collectors were said to be aggressive bidders on many...

There's more. Anyway, go look it up, lots of sources, here is one: www.ml.com/media/114235.pdf

Quote:

Didn't work in Smoot-Hawley. Any reason to expect different now?
Because in an increasingly resource-poor world, we got the goods- if we can manage our farms, water supplies, fisheries, to be sustainable. The only other nations that match our resource wealth are Russia, Brazil, and (maybe) Canada.

Quote:

And the price of everything goes up. Not saying this is a bad thing, but its something of which you need to be aware. -geezer
Not if you increase production at the same time. That is the OTHER part of my plan: Increase production (manufacturing specifically). -signy
But increased production only works if you have increased demand. I can make all the blivits I want, but if the blivit market isn't there, I got a lot of leftover blivits.-geezer

Geezer, son, this isn't rocket science. If people have more $ in-hand, they will be in the market to buy. As long as you have the basic manufacturing capability... especially the ability to build the tools that you need to build the factories (chip fabs, tool-and-die makers, robotics, specialty metals) the demand will, in a few years, be naturally filled by increased production. But that is why you don't just DUMP money into people's hands, and you don't just BAN imports. Manufacturing takes time to get on line. The increase in demand needs to SLIGHTLY lead the increase in production.
Quote:

[g]Saw that coming. [Increase taxes on the wealthy, and eliminate corporate tax loopholes.] -geezer
And so...?? -signy
So nothing. Just a comment.-geezer

So, you have no problem with increased taxes. Good to know.

And finally- bringing up the point that you didn't address -- how do you feel about 1% of the population taking in more $ than the bottom 50%? Are you aghast, do you see it as a problem, or are you OK with it?

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Friday, January 3, 2014 4:35 PM

FREMDFIRMA


Quote:

Originally posted by M52NICKERSON:
It's funny that you think economics is bullshit, but post an article that accuses bankers of using simple economics to control people.


It's not Economics, Dreamtrove, it's Usury.
Which you already knew.

-F

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Friday, January 3, 2014 4:50 PM

M52NICKERSON

DALEK!


Quote:

Originally posted by FREMDFIRMA:
Quote:

Originally posted by M52NICKERSON:
It's funny that you think economics is bullshit, but post an article that accuses bankers of using simple economics to control people.


It's not Economics, Dreamtrove, it's Usury.
Which you already knew.

-F



Still not Dreamtrove, sorry. I had long running arguments with him. I think your memory is failing.

Call it what you want, Economics/Usury it is still hypocritical to say it is bullshit and then post an article talking about using it as control.

I do not fear God, I fear the ignorance of man.

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Friday, January 3, 2014 11:08 PM

KPO

Sometimes you own the libs. Sometimes, the libs own you.


Quote:

Yep. Need a good war to make Keynes work.

No, Keynesian stimulus always works. If the spending is small, the effect will be small. If the spending is big, the effect will be big. A big stimulus is better than a small stimulus. But a small stimulus is better than no stimulus at all. If WWII had not happened and Roosevelt had spent all that money on infrastructure it would have worked EVEN BETTER. He could've spent a fraction as much, and it would've worked better.

Quote:

Apparently there are no policies (short of world war) that are liberal enough for you

World war is a liberal policy... another one for your anti-liberal scrapbook.

Quote:

Where did I say there was a single factor causing the GD?

Let me rephrase: You were the one who made out that only one type of policy was tried during the GD ('10 years of liberal policies').

Quote:

Graphs above show national debt going up during the 1929-1939 period, so revenues did not increase at the same rate as spending.

You're forgetting GDP again. Debt was steady as a proportion of GDP. That means the deficit was about the same as economic growth. The debt increased, but its growth didn't outpace the growth in the economy, and the country's ability to pay it back. Conclusion: US fiscal policy was NOT loose, it was restrained. Contrary to what Keynesianism recommends.

It's not personal. It's just war.

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Saturday, January 4, 2014 2:11 AM

FREMDFIRMA


Quote:

Originally posted by M52NICKERSON:
Call it what you want, Economics/Usury it is still hypocritical to say it is bullshit and then post an article talking about using it as control.


As a "Science" it *is* complete bullshit, it's a THEORY, and a theory, especially one which fails any scientific attempt to support it, is not SCIENCE - it's just an excuse, is what it is.
And I shouldn't have to even explain that to you, you're just being a jackass cause I outed you.

-F

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Saturday, January 4, 2014 6:07 AM

MAGONSDAUGHTER


Wow, M52nickerson is Dreamtrove?

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Saturday, January 4, 2014 9:36 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by SIGNYM:
GEEZER, before you get all apoplectic about Federal debt, and before everyone gets focused on the government, I want to re-introduce something that every seems to have forgotten.

As far as I can tell, the largest inflator of USD is the investment banks. They have - literally- 10 times as much money in hedge funds as there are assets throughout the entire world. Domestic banks, too, have a license to "print money"- by the rules of the FDIC they are allowed to loan out approximately 10X as much money as they actually have on hand.

Since almost ALL money exists in one bank account or another, and banks are free (under current laws) to loan out far more than they have on-hand, banks have proved to be very capable of expanding the US money supply by a factor of five- or more. All of this non-government money-printing tends to go under the radar.

This excessive speculative lending (on real estate, and then stocks in 1929; and on subprime mortgages in 2000-2007) inflated the money supply, and that inflation completely bypassed government spending controls bc the government wasn't even part of it.

If you want to stop bubbles before they start, you NEED to require that banks have a LOT MORE money on-hand as part of their lending practices, and also that they define their asset classes in something other than fantasmic terms (how do you value your loan or bond portfolio when their prices are gyrating? "Mark to market"? "Mark to maturity"?)

Anyway, will be busy today. Just wanted to point out that the Federal budget is not the main money-supply-expander, it's the banks.



But if you require banks to have a lot of money on hand, doesn't that take that money out of circulation, thus decreasing the 'blood flow' you suggest is needed for an economy to work?


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Saturday, January 4, 2014 9:47 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by M52NICKERSON:
Deficits would get paid down when the economy is doing well. I covered that already. Please try and follow along. Second you really need to understand that governments using their own issued fiat currency can't go insolvent.



The last time the national debt went down was 1957. I think there were periods since then when the economy was doing well. So apparently the debt doesn't get paid down.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4
.htm


Quote:

Quote:

Originally posted by Geezer:
Not sure I see much in these to support "Had government spending been lower, and taxes stayed high the economy of the 20's may not have been as roaring but it might have helped prevent the Great Depression."



Okay I will spoon feed you. Look at the Specific theories of cause section. It talks about how lending increased as interest rates fell. They fell because people were paying off thier debts and the banks needed to make loans more appealing. If the economy had not grown as fast as it had in the twenty loans would have stayed more stable as people would not have paid down thier debts and banks would not have looked to lower interest rates.

You also had productivity shock which again stemmed from the economic growth in the twenty. The heavy flow of money in the twenty and the easy of finding investors ment that production skyrocketed. That caused a flood of stock and a fall in prices.

Look at an of the explantions you want and will find that they all have one thing in common, a tie into the rapid growth of the economy of the twenties.



So you're saying that the government should have raised taxes at a time when government spending was going down, just so people would not have enough money to pay off their loans?

Maybe you and SignyM should discuss whether the flow of money is a good or bad thing.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Saturday, January 4, 2014 10:23 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by SIGNYM:
Quote:

The reason I keep bringing this up is that you are more likely to have a good-sized war than you are to implement the spending programs you propose.
Well, that is your supposition, but not our proposal. So don't keep saying that KPO and I think that was is the answer. War is YOUR answer.



As the only example you or KPO can give of the Keynesian cure working is WWII, I think it's a pretty well-founded supposition.


Quote:

AFA getting stimulus spending thru, I think a lot of ppl already recognize that much of our infrastructure is well past its safe lifespan, that our health care system is a clusterfuck, that a lot of big jobs need doing. Where they are stymied is not at the level of "the people" (because polls show that people support spending on specific programs) but at the level of "Congress".


Yep. When you ask people if they support spending, they do until told that they will be providing the money spent. Then they vote out the congressperson who is spending their money.

Quote:

Not sure if you know this, but the wealthy are "investing" their money either in already-produced unique items (diamonds, gold, Bitcoins, fine art) or in futures/ hedge funds. This is part of a complex discussion about what happens to "savings", already addressed by Keynes and other economists. -signy

Quote:

Anecdotal. Cites? -geezer


Oh, this is all over the economic news. Chinese wealthy are buying a crapload of gold, wine, art, vehicles, etc. The EU wealthy are buying up gold, art, diamonds, mansions. The mix varies from year to year (one year its art, the next year its Bitcoin) but speculation is definitely the ongoing game:
www.ml.com/media/114235.pdf



The ml.com piece shows total worth of the high wealth individuals at $42.7 trillion. They don't say how much if spent on "investments of passion", but When they talk about millions spent on art, etc., that leaves a lot of $42.7 trillion that's not.

Quote:

Quote:

Didn't work in Smoot-Hawley. Any reason to expect different now?
Because in an increasingly resource-poor world, we got the goods- if we can manage our farms, water supplies, fisheries, to be sustainable. The only other nations that match our resource wealth are Russia, Brazil, and (maybe) Canada.



Quite a bit or resource, much of it undeveloped, in Africa and other South American countries as well. China is moving to get raw materials out of Africa, as well as places like Afghanistan. Also populations in many places who will work for a lot less than folks here and feel like they're making a good living. Also, you will be playing tariff wars with countries with a command economy and leaders who don't care about the effect of their bans on buying and selling on the people, as long as their political aims are advanced.


Quote:

Geezer, son, this isn't rocket science. If people have more $ in-hand, they will be in the market to buy.


But if they have more money in hand because they are getting higher wages, then the price of the things they are making and buying will be higher (even if it's made overseas, since your tariffs will increase the price). Therefore they can buy less of it. I suppose that there might be a balance point at which an increase in wages is larger than the increase in price, but finding it will be rocket science.

Quote:

Quote:

So nothing. Just a comment.-geezer
So, you have no problem with increased taxes. Good to know.


Depends on how it's done.

Quote:

And finally- bringing up the point that you didn't address -- how do you feel about 1% of the population taking in more $ than the bottom 50%? Are you aghast, do you see it as a problem, or are you OK with it?


To keep on the subject of cures for recession, I don't care for the bailouts of banks, etc. by the Bush and Obama administrations during the most recent recession. Story noted the increasing divide between the rich and poor caused by government policy then.


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Saturday, January 4, 2014 10:36 AM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by kpo:
Quote:

Yep. Need a good war to make Keynes work.

No, Keynesian stimulus always works. If the spending is small, the effect will be small. If the spending is big, the effect will be big. A big stimulus is better than a small stimulus. But a small stimulus is better than no stimulus at all. If WWII had not happened and Roosevelt had spent all that money on infrastructure it would have worked EVEN BETTER. He could've spent a fraction as much, and it would've worked better.



But Roosevelt couldn't sell spending on the scale required before WWII. That's my point. There is no example of the Keynesian cure actually succeeding in ending a depression other than WWII.

Quote:

Quote:

Apparently there are no policies (short of world war) that are liberal enough for you

World war is a liberal policy... another one for your anti-liberal scrapbook.



Hey. You're the one who criticized Roosevelt for not going far enough down the Keynesian liberal road. As noted, the only success story you can show for Keynes is WWII.

Quote:

Quote:

Where did I say there was a single factor causing the GD?

Let me rephrase: You were the one who made out that only one type of policy was tried during the GD ('10 years of liberal policies').


Let me rephrase as well: 10 years of mostly liberal policies.


Quote:

Quote:

Graphs above show national debt going up during the 1929-1939 period, so revenues did not increase at the same rate as spending.

You're forgetting GDP again. Debt was steady as a proportion of GDP.



Nope. As noted above:

"This graph shows Federal spending as a percent of GDP went from less than 4% in 1929 to almost 11% in 1936. Doesn't look like spending was being braked much to me."

http://www.usgovernmentdebt.us/spending_chart_1920_1940USp_15s1li011mc
n_F0f_US_Federal_Spending





"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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Saturday, January 4, 2014 11:54 AM

SIGNYM

I believe in solving problems, not sharing them.


Quote:

The reason I keep bringing this up is that you are more likely to have a good-sized war than you are to implement the spending programs you propose.-geezer

Well, that is your supposition, but not our proposal. So don't keep saying that KPO and I think that was is the answer. War is YOUR answer. -signy

As the only example you or KPO can give of the Keynesian cure working is WWII, I think it's a pretty well-founded supposition.-geezer

Not true. Keynesian spending stabilized and began to reverse the plunge that was the Great Depression. And redistributive spending (Social Security, etc) was followed for many years AFTER WWII, and we had a robust economy.

Quote:

AFA getting stimulus spending thru, I think a lot of ppl already recognize that much of our infrastructure is well past its safe lifespan, that our health care system is a clusterfuck, that a lot of big jobs need doing. Where they are stymied is not at the level of "the people" (because polls show that people support spending on specific programs) but at the level of "Congress". -signy

Yep. When you ask people if they support spending, they do until told that they will be providing the money spent. Then they vote out the congressperson who is spending their money.-geezer

Not really. People have consistently polled for a tax on the wealthy, it would be THOSE (wealthy) people who would by paying for the spending.

Quote:

Not sure if you know this, but the wealthy are "investing" their money either in already-produced unique items (diamonds, gold, Bitcoins, fine art) or in futures/ hedge funds. This is part of a complex discussion about what happens to "savings", already addressed by Keynes and other economists. -signy

Anecdotal. Cites? -geezer

Oh, this is all over the economic news. Chinese wealthy are buying a crapload of gold, wine, art, vehicles, etc. The EU wealthy are buying up gold, art, diamonds, mansions. The mix varies from year to year (one year its art, the next year its Bitcoin) but speculation is definitely the ongoing game: http://www.ml.com/media/114235.pdf-signy

The ml.com piece shows total worth of the high wealth individuals at $42.7 trillion. They don't say how much if spent on "investments of passion", but When they talk about millions spent on art, etc., that leaves a lot of $42.7 trillion that's not.-geezer

But doesn't address the trillions spent in hedge funds, which are simply bets made in the direction of future indexes. Sort of llike the housing bubble was bets made in the direction of housing price futures. And, as I mentioned before, there is roughly 10 TIMES the total world GDP placed in hedge funds at the moment. That's a lot of speculation!

Quote:

Didn't work in Smoot-Hawley. Any reason to expect different now? -geezer

Because in an increasingly resource-poor world, we got the goods- if we can manage our farms, water supplies, fisheries, [ETA forests] to be sustainable. The only other nations that match our resource wealth are Russia, Brazil, and (maybe) Canada. -signy

Quite a bit or resource, much of it undeveloped, in Africa and other South American countries as well. China is moving to get raw materials out of Africa, as well as places like Afghanistan. Also populations in many places who will work for a lot less than folks here and feel like they're making a good living. Also, you will be playing tariff wars with countries with a command economy and leaders who don't care about the effect of their bans on buying and selling on the people, as long as their political aims are advanced.-geezer



Except for tantalum, chromium, and titanium (and we can trade for those) we really don't NEED Africa, and Africa is being flayed alive for resources. Whatever is there isn't doing Africans any good (except the few corrupt leaders at the top) and isn't developing their economy. So as far as being a unified force, Africa is a non-entity.

And as far as playing tariff wars with command economies.... you mean China... China has already cut off the Treasury-buying conveyor. They said so quite plainly about three months ago, and are doing what they said: they're significantly reducing their USD holdings and Treasury purchases. (I already posted about it under REAL NEWS) The REAL nub is oil and gas. That will require a gradually increasing tariff.


Quote:

Geezer, son, this isn't rocket science. If people have more $ in-hand, they will be in the market to buy.[RE excess blivits]-signy

But if they have more money in hand because they are getting higher wages, then the price of the things they are making and buying will be higher (even if it's made overseas, since your tariffs will increase the price). Therefore they can buy less of it. I suppose that there might be a balance point at which an increase in wages is larger than the increase in price, but finding it will be rocket science.-geezer

That is why I would phase in the increased wages AND increased tariffs. I'm fully aware that you can't rebuild a manufacturing economy in one year. It's OK if we miss out on iPhones and TVs for a couple of years, but crucial industries need time to be built up: oil, energy conservation, renewable power, steel, fabric, chip fabs etc.


Quote:

So nothing. Just a comment [RE tax hikes and tax reform] .-geezer
So, you have no problem with increased taxes. Good to know. -signy
Depends on how it's done.-geezer



what are your parameters?

Quote:

And finally- bringing up the point that you didn't address -- how do you feel about 1% of the population taking in more $ than the bottom 50%? Are you aghast, do you see it as a problem, or are you OK with it?

To keep on the subject of cures for recession, I don't care for the bailouts of banks, etc. by the Bush and Obama administrations during the most recent recession. Story noted the increasing divide between the rich and poor caused by government policy then.

This point, as far as I'm concerned, is VERY MUCH on topic for cures for recession/ depression.

The whole point of Keynesian economics was to increase aggregate demand. Demand FAILED because the purchasing power of the vast majority of people had been whittled down beyond the point which would sustain an economy.

Take your mind off Mises or Keynes and the value of currency, and consider economies. An economy is the production and consumption of goods and services. Money merely facilitates that exchange. All else (currency value, stock prices, hedge funds, house prices, debt load) is meaningless except insofar as it encourages or discourages production and consumption now and in the future.

A stable economy is one where production and consumption are equal, and will remain so for the foreseeable future. The inability to maintain a steady market... ie a steady level of consumption or demand (however you want to frame it) ... has always been capitalism's problem. When money is withdrawn as "profit" at the production step, that money MIGHT go into investment for the future.... ie, research (which employs scientists) and development (engineers) and production (workers), but unless that money is FULLY SPENT into the lowest strata of the economy, eventually, over many cycles of production and consumption, the money eventually spends its time hanging out with the rich folk, not circulating anywhere, nor powering demand which will impel production.

Now, you can flog demand by LOANING money to the poor... credit card loans, student loans, payday loans. Even better, you can sub-prime loan it on the basis of a rising bubble (stocks, houses, tulips, Bitcoins) but it doesn't take a rocket scientist to realize that the loans will come to a screeching halt... a catastrophic halt, in the case of a collapsing bubble... because (not surprisingly!) poor people can't pay them back! And then demand evaporates, and a large part of the economy is idled while unemployed people can't produce even life's necessities. The problem of idled money (money which does not demand goods and services) is often termed one of "excess savings".

That is the situation we had in the 1920s, and the situation we have today. I read somewhere that Keynes believed that the cure for economic depression was actual wealth redistribution. Under wealth redistribution, no new money is created, and the value of the currency remains pristine. However, he also realized that redistribution was a political non-starter, so he sought instead to create more money and inject it into the economy thru government deficit spending. He also believed in the creation of low-interest loans for the masses.... credit card loans, home loans, auto loans. The banks got involved in creating money to be used for purchases, powering demand.

As you can imagine, the creation of more money would lead to a devaluation of the money held by the wealthy- a stealthy, uniform, inescapable "inflation tax". But the creation of more money was never meant to be a PERMANENT policy. And the only way to eliminate "money creation" as the solution to excess savings is to introduce policies that keep recycling money downwards.... ALL the way down. That way, it will keep bubbling up thru the economy, creating demands along the way.

So, to get back to the idea that a flat wealth distribution (low GINI score) will inoculate economies against depressions, if you look across the board, you will see many nations with low GINIs that are very wealthy but also some that are moderately poor. OTOH, you will see nations with very high GINIs that are desperately poor, and few nations with high GINI that are wealthy (except in some small nations that are either banking nations or oil-producers).

Also, to get back to the objection (which hasn't been raised yet, but would be by any astute student of economics) that raising taxes inhibits growth, that (in)famous paper by Rienhart and Rogoff has been debunked. https://blogs.umass.edu/econnews/2013/04/17/critique-of-reinhart-rogof
f-garners-international-attention
/

Finally, in terms of the USA "going it alone" by creating tariffs to redevelop manufacturing... I would like you to mentally draw a border around the USA and think about what we have and what we need. We HAVE a lot of the important stuff... things that China doesn't have: Food, water (assuming global climate shift and fracking doesn't destroy it), forests and fisheries (provided we can manage them properly), iron, lithium (yep), copper, and nearly all of the raw materials necessary for a complete economy. We are lacking in oil (but we use twice as much oil per capita as any other developed nation, and since we import half of it we could eventually eliminate imports thru conservation), some strategic minerals, coffee (dear god! Anyway, coffee grows wherever avocados grow), and cocoa: We have an abundance of resources compared to China, and an abundance of development compared to Africa.

By looking in depth at our resources and deficiencies, I think we can craft a redevelopment plan which will allow us to grow our own industries again through

selective and gradually increasing tariffs and increasing minimum wage;
a reform of our tax policies which will discourage "financialization" and encourage actual investment;
a reduction in military spending to be used instead to remediate our homes, industries, infrastructure, and environment;
an increase in taxes on the rich to reduce the deficit;
and the development of state banks and city banks;
and the requirement of nearly 100% capitalization on loans.

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Saturday, January 4, 2014 1:29 PM

M52NICKERSON

DALEK!


Quote:

Originally posted by Geezer:
The last time the national debt went down was 1957. I think there were periods since then when the economy was doing well. So apparently the debt doesn't get paid down.



That is because the government does not reduce spending during those times. That was explained to you before as well.

Quote:

Originally posted by Geezer:So you're saying that the government should have raised taxes at a time when government spending was going down, just so people would not have enough money to pay off their loans?

Maybe you and SignyM should discuss whether the flow of money is a good or bad thing.



Yes that is what I'm saying. During good economic times the government should reduce spending and raise taxes which take money out of the economy, or slows the flow of money. That will slow economic growth which helps prevent massive bubbles, sharply falling interest rates and other such things that can lead to recessions.

Keynesian economics is about using government spending as a counter weight to the economy. Government spending should go up when the economy enters a recession and it should go down when the economy is in a boom. Taxes should be lowered in a recession and rise in an boom.

This is not hard.

Yes money flowing is a good thing. To much flow can be bad as can to little.

I do not fear God, I fear the ignorance of man.

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Sunday, January 5, 2014 9:25 AM

KPO

Sometimes you own the libs. Sometimes, the libs own you.


Quote:


You're forgetting GDP again. Debt was steady as a proportion of GDP.


Nope.


I'm sorry my friend, but that is indisputable fact. Do I have to show the debt/GDP graph again?

Quote:

This graph shows Federal spending as a percent of GDP

Yes spending went up. Yes debt went up. But two other things ALSO went up: 1) revenue and 2) GDP. When you take all of these factors into account, and don't omit any of them for convenience, then debt is steady as a proportion of GDP from around 1933. Which means the US's debt burden was not growing.

Quote:

As noted, the only success story you can show for Keynes is WWII.

I sometimes forget how insulated American conservatives are from reality. Here's the CBO's verdict on Obama's ARRA stimulus:

"CBO estimates that ARRA’s policies had the following effects in the second quarter of calendar year 2011 compared with what would have occurred otherwise:

* They raised real (inflation-adjusted) gross domestic product by between 0.8 percent and 2.5 percent,
* Lowered the unemployment rate by between 0.5 percentage points and 1.6 percentage points,
* Increased the number of people employed by between 1.0 million and 2.9 million, and
* Increased the number of full-time-equivalent (FTE) jobs by 1.4 million to 4.0 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers)."

http://www.cbo.gov/publication/42216

Another recent case, Japan's 2013 stimulus spending, which an IMF director commented on in October:

Quote:

As we have stressed in this year’s Article IV Report, we at the IMF believe that the new policy framework provides a unique opportunity for Japan to end decades-long deflation and sluggish growth, and reverse the rise of public debt.

Japan has already made progress in this direction. Here, I would like to list a few achievements:

The economy grew strongly in the first half of this year, driven by sizeable stimulus spending, robust private consumption and a rise in exports.

Headline inflation rose substantially in recent months, and several indicators also point to an in increase in long-term inflation expectations.



http://www.imf.org/external/np/speeches/2013/102913.htm

You also have all the evidence of austerity that has been carried out in Europe (and the US) since 2010. Or for that matter, in the US in 1937. Austerity is the opposite of stimulus, and predictably, it has the opposite effect:

It's not personal. It's just war.

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Sunday, January 5, 2014 12:24 PM

GEEZER

Keep the Shiny side up


Quote:

Originally posted by SIGNYM:
Not true. Keynesian spending stabilized and began to reverse the plunge that was the Great Depression. And redistributive spending (Social Security, etc) was followed for many years AFTER WWII, and we had a robust economy.



Keynesian spending might have started to reverse the Great Depression, after four to seven years, depending on if you consider Hoover's approach Keynesian (I do), but that reversal wasn't sustainable, because FDR couldn't sell the country on continued spending. Then again, Hayak and Rothbard believe that FDR's interventionist policy actually lengthened the depression by keeping the market from making necessary corrections.

Quote:

Not really. People have consistently polled for a tax on the wealthy, it would be THOSE (wealthy) people who would by paying for the spending.


Yet they don't elect representatives who will increase taxes on the wealthy - or much of anybody - to the extent needed to support the spending you think Keynesian recovery requires.

Quote:

But doesn't address the trillions spent in hedge funds, which are simply bets made in the direction of future indexes. Sort of llike the housing bubble was bets made in the direction of housing price futures. And, as I mentioned before, there is roughly 10 TIMES the total world GDP placed in hedge funds at the moment. That's a lot of speculation!


But it's not all rich folks doing the speculation. Unions, pension funds, aggregations of individuals, etc.

Quote:


Except for tantalum, chromium, and titanium (and we can trade for those) we really don't NEED Africa, and Africa is being flayed alive for resources. Whatever is there isn't doing Africans any good (except the few corrupt leaders at the top) and isn't developing their economy. So as far as being a unified force, Africa is a non-entity.



But Africa's resources can be obtained more cheaply than the same things here in the U.S. The kleptocracies there, often in cahoots with the Chinese, don't care about renewable resources, or environmental or worker safety. If the Chinese can get the raw materials cheaply from Africa and manufacture cheaply in China, they can undercut the U.S. on the world market - especially if we're dealing with governments of countries already stung by our tariffs.


Quote:

That is why I would phase in the increased wages AND increased tariffs. I'm fully aware that you can't rebuild a manufacturing economy in one year. It's OK if we miss out on iPhones and TVs for a couple of years, but crucial industries need time to be built up: oil, energy conservation, renewable power, steel, fabric, chip fabs etc.


Then you have an issue of pretty much forcing folks to pay higher prices for domestic goods, but for several years don't have the domestic goods on the shelves yet. So how does money get spent to stay in circulation?


Quote:

The whole point of Keynesian economics was to increase aggregate demand. Demand FAILED because the purchasing power of the vast majority of people had been whittled down beyond the point which would sustain an economy.

Quote:

Take your mind off Mises or Keynes and the value of currency, and consider economies. An economy is the production and consumption of goods and services. Money merely facilitates that exchange. All else (currency value, stock prices, hedge funds, house prices, debt load) is meaningless except insofar as it encourages or discourages production and consumption now and in the future.

A stable economy is one where production and consumption are equal, and will remain so for the foreseeable future. The inability to maintain a steady market... ie a steady level of consumption or demand (however you want to frame it) ... has always been capitalism's problem.



Guten tag, Herr Marx.



Quote:

Finally, in terms of the USA "going it alone" by creating tariffs to redevelop manufacturing... I would like you to mentally draw a border around the USA and think about what we have and what we need. We HAVE a lot of the important stuff...


But the problem isn't the stuff, it's having the folks who are willing to take on the jobs we now send overseas - heavy manufacturing, component assembly, piecework sewing, and many more - have those jobs done in an environmentally responsible, labor-friendly manner, and still keep prices reasonably low.


Quote:

By looking in depth at our resources and deficiencies, I think we can craft a redevelopment plan which will allow us to grow our own industries again through

selective and gradually increasing tariffs and increasing minimum wage;
a reform of our tax policies which will discourage "financialization" and encourage actual investment;
a reduction in military spending to be used instead to remediate our homes, industries, infrastructure, and environment;
an increase in taxes on the rich to reduce the deficit;
and the development of state banks and city banks;
and the requirement of nearly 100% capitalization on loans.



Could you specify against what foreign industries you would apply your selective tariffs? Autos? Clothes? Electronics? Rum?


"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

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