And today's headlines:

GET READY FOR $5 GAS... [HR][/HR]Pentagon May Oust Troops Involuntarily to Meet Reductions in Obama Plan...

Government 'still getting bigger'...

Obama proposes pay hike for federal workers...



Have a great day everyone.

QuakerOats;1085565 wrote: Indeed, President Obama did make that promise that day, saying, “today I’m pledging to cut the deficit we inherited in half by the end of my first term in office.

Well, first you have to add all the money going to the inherited problems to the inherited deficit, so that gets him "off the hook" for the additional debt. Then, technically, he pledged to cut the deficit in half but didn't say WHEN that would be effective (i.e. 2020).

So, see, he didn't lie you just had the wrong math and time table. :laugh:

BGFalcons82;1085509 wrote:1. The austerity measures being used by the Greeks are the medicine to muliple decades of spending money they didn't have. Their currency doesn't have the dollar's buying power, so they couldn't fire up the printing presses to create cash out of thin air like our leaders have done. Thus, they have borrowed hundreds of billions and their creditors aren't willing to just write off the debt without a serious attempt to stop their deficit vortex and repay their debt. The piper, in this case the financial institutions of Europe and the U.S., must be paid. There are consequences for spending money they don't have.

2. Yes, I agree their economy isn't nearly as large/diverse as ours. Yes, I agree they don't have as much impact around the world as the U.S. Yes, I agree they aren't just like the U.S. I also agree that our spending of money that does not exist is exactly the path they went down. Now they are experiencing the pain of withdrawal off of their unfunded entitlement tits. Our pain will be much much worse and thus...the violence may soon follow. Hence my reference if anyone is watching what is happening in Greece. Our decades of deficits and a godzilla of debt that will never be repaid have the exact same consequences, with different timing.

3. I will remind you that Barry is projecting trillion-dollar yearly deficits into the future. If we keep going at his pace, at some point within the next 5 years the debt service will be over $1,000,000,000,000 per year. Debt service payments purchase NOTHING, except for the opportunity to create MORE DEBT. You opine consistently that debt spending is required today as interest rates are at record lows and we must take advantage of money that is nearly "free of charge". Your hope and prayer is that eventually...sometime....someday....maybe....with crossed fingers/toes....the spending will kick-start economic nirvana and we'll grow our way out of the $16,000,000,000,000 debt sinkhole. This is a fairly tale. We simply cannot amass more debt that requires more servicing and survive. Chaos awaits sooner rather than later if we don't stop our Keynesian charade.

Just a few things.

You still think that macroeconomic policy is a morality play wherein the liberal spenders must be punished for their years of fiscal profligacy. You fail to see that even the fiscally virtuous, such as Spain, suffer under austerity policies in economic downturns and what were once budget surpluses quickly become budget deficits. Iceland was just as bad as Greece but they devalued and now they have a chance, which they would not if they were in the Eurozone.

Second, you say that we cannot amass more debt and survive, as a free market conservative, and yet, the market, the ultimate soothsayer says this is not so. Why do you not care what the market thinks?

For a little perspective, when John Maynard Keynes was making his case in Great Britain, the U.K's Debt was nearly 200% of GDP...

Meanwhile, while you're complaining about government debt, the government's safety net spending has allowed private balance sheets to recover a bit and private U.S. debt has dropped significantly which is exactly what needs to happen so private demand can recover.

A little inflation would do better then waiting for everyone to pay down their private debt though just like Daylight Savings time is more efficient to get everyone to change their clocks...

But just to make it clear one more time, if Obama were to propose a budget that was "balanced," unemployment would increase, revenue would fall and our deficit and budget problems would become worse. If you want to try to balance the budget, you ought to put forth an honest proposal for bringing the unemployment rate down to 5% first.

And for good measure, I thought you might enjoy this piece in the times about how even those who disdain government increasingly rely on the safety net because nobody will do anything to get the economy moving. http://www.nytimes.com/2012/02/12/us/even-critics-of-safety-net-increasingly-depend-on-it.html?_r=1&src=me&ref=general

well, we DID have to pass the bill to learn what was in it. First, free birth control, what's next? What could Mr. Dictator tell private businesses they have to provide for free next? I'm sure they'll think of something, after all there are millions of people that the government has to keep on the dole for votes.

http://www.theblaze.com/stories/wh-chief-of-staff-obamacare-allows-the-president-to-tell-a-private-company-they-have-to-offer-a-product-and-offer-it-for-free/

[video=youtube;vBOuIukKw6M][/video]

BoatShoes;1085845 wrote:Just a few things.

You still think that macroeconomic policy is a morality play wherein the liberal spenders must be punished for their years of fiscal profligacy. You fail to see that even the fiscally virtuous, such as Spain, suffer under austerity policies in economic downturns and what were once budget surpluses quickly become budget deficits. Iceland was just as bad as Greece but they devalued and now they have a chance, which they would not if they were in the Eurozone.

I thought the Keynesian ideal was to run surpluses during the booms and big deficits during the busts. Looks like Spain is learning the hard way that big deficits won't solve the problem, but it will surely dry up the available credit you can borrow from.

The countries that are trying to cut spending aren't doing so because they think it is the right thing to do, even though it is. They are doing it because no one will lend to them anymore. We don't have that problem yet because we force the world to take dollars for their oil at gunpoint. When either the Euro (if it survives, which is doubtful) or the Deutschmark or RMB become viable options, and when it appears we have finally spread ourselves too thin, we will learn the same lesson.

Cleveland Buck;1085903 wrote:I thought the Keynesian ideal was to run surpluses during the booms and big deficits during the busts. Looks like Spain is learning the hard way that big deficits won't solve the problem, but it will surely dry up the available credit you can borrow from.

The countries that are trying to cut spending aren't doing so because they think it is the right thing to do, even though it is. They are doing it because no one will lend to them anymore. We don't have that problem yet because we force the world to take dollars for their oil at gunpoint. When either the Euro (if it survives, which is doubtful) or the Deutschmark or RMB become viable options, and when it appears we have finally spread ourselves too thin, we will learn the same lesson.

Spot on!! I couldn't have replied any more succinctly to this issue.

ONLY in Obamaville, is the government spending more money counted as cuts to the tune of $2.50 for every $1.00 in new taxes. Jeff Sessions doesn't let the Obama spin-meister squirm out of his doublespeak although he makes multiple attempts at it - http://nation.foxnews.com/budget-2013/2012/02/14/stunning-video-obama-budget-chief-can-t-answer-yes-or-no-question

Cleveland Buck;1085903 wrote:I thought the Keynesian ideal was to run surpluses during the booms and big deficits during the busts. Looks like Spain is learning the hard way that big deficits won't solve the problem, but it will surely dry up the available credit you can borrow from.

The countries that are trying to cut spending aren't doing so because they think it is the right thing to do, even though it is. They are doing it because no one will lend to them anymore. We don't have that problem yet because we force the world to take dollars for their oil at gunpoint. When either the Euro (if it survives, which is doubtful) or the Deutschmark or RMB become viable options, and when it appears we have finally spread ourselves too thin, we will learn the same lesson.

Good post, CB.

Cleveland Buck;1085903 wrote:I thought the Keynesian ideal was to run surpluses during the booms and big deficits during the busts. Looks like Spain is learning the hard way that big deficits won't solve the problem, but it will surely dry up the available credit you can borrow from.

The countries that are trying to cut spending aren't doing so because they think it is the right thing to do, even though it is. They are doing it because no one will lend to them anymore. We don't have that problem yet because we force the world to take dollars for their oil at gunpoint. When either the Euro (if it survives, which is doubtful) or the Deutschmark or RMB become viable options, and when it appears we have finally spread ourselves too thin, we will learn the same lesson.

1. You don't seem to understand what it means when you issue debt in a currency that is not your own. The ECB should do for Greece what Greece might do if it had its own currency

2. Spain did run surpluses during the good times but the point is that it makes no difference when you're compelled to engage in massive austerity during bad times (which is wrong) by a Central Bank that believes in the confidence fairy.

believer;1086017 wrote:Good post, CB.

It's not a good post and that's why this forum has become silly. Cleveland Buck tries to suggest that the large deficits facing spain now is because of some kind of keynesian stimulus when really they're they're the result of the kinds of austerity measures that he thinks would be good and cause economic growth to appear from no where.&nbsp;<br><br>There is a difference between actively borrowing money to put unused labor to productive use while private balance sheets deleverage and private demand picks up and slashing government outlays in such a way to raise unemployment over 20% and reduce income tax receipts and running a deficit

And the bottom line is that its that time of the year against when Republicans pretend to care about deficits. If Obama had proposed cutting the top marginal rate down to 8% instead of spending more on transportation infrastructure, for example, Republicans would not care despite the fact that such a maneuver would also project a large deficit.

BoatShoes;1086076 wrote:1. You don't seem to understand what it means when you issue debt in a currency that is not your own. The ECB should do for Greece what Greece might do if it had its own currency

2. Spain did run surpluses during the good times but the point is that it makes no difference when you're compelled to engage in massive austerity during bad times (which is wrong) by a Central Bank that believes in the confidence fairy.

The ECB has interest rates at 1% or something, so they are printing, which is what you want. They just can't do anymore without destroying the Euro and unleashing even higher price inflation on all of Europe. The Germans don't want to deal with that just to temporarily bail out the irresponsible. That's what you don't understand. You want to print money, but that is a temporary band-aid, and it makes the end result that much worse. Do you think the ECB is above inflating? They frown upon it? Of course not. They just can't do it like we do without breaking up the Eurozone. You can see what the market feels about Greece and Spain and Portugal and Ireland. What do you think it would think of a tidal wave of Euros? Besides, we are inflating enough to make up the difference and sending it over there. It doesn't do any good. When government bubbles burst, there is no escaping the correction. You can try to prolong it at your own peril, but it will come. Yes, unfortunately revenues will drop. They can print themselves into oblivion or default. Looks like that's not sustainable. I guess the central planners didn't see that coming.

The could throw Greece out of the Eurozone and they can print off a bunch of drachmas, but what do you think those will be worth? Sure the people will get their government checks, but they will starve trying to buy anything with them.

Looking at what Bernanke has done and saying the ECB should do the same doesn't work. They don't have the advantage we have that is propping the dollar up ever so tenuously. We have our guns pointed at every oil producing nation, and they know what's coming if they would rather take gold or RMB or Yen or anything for their oil. Look at Iran. They were talking about trading oil for gold with China and India, and all of a sudden we are on the brink of the war with them. So every country on Earth that imports any oil needs dollars. That won't continue for too much longer. The people here getting sick of never ending wars. Eventually the sheer numbers of dollars piling up all over the world and driving up prices all over the world will cause them to reject them and send them flooding back here.

I can never watch these enough. They are great, even if they are a bit nerdy. I saw these a while ago, but ran into them again the other day.

[video=youtube;d0nERTFo-Sk][/video]

[video=youtube;GTQnarzmTOc][/video]

^^^lol Love it!

BoatShoes;1086079 wrote:There is a difference between actively borrowing money to put unused labor to productive use while private balance sheets deleverage and private demand picks up and slashing government outlays in such a way to raise unemployment over 20% and reduce income tax receipts and running a deficit

A) Stimulus spending rarely "put unused labor to productive use". It's literally little different than dropping money from a helicopter, and probably less effective.

B) Have you ever really thought of the math involved with stimulus spending? A good year is 4%+ growth? A horrible year is -2%? So that's a difference of 6%, or on a $15T economy about $900B....Then let's assume the govt takes 20% (a good year) in revenue, so that works out to $180B in revenues from the stimulus. Thus an $800B stimulus would take about 5 years to break-even. But the economy almost always recovers naturally before then, so it's normally a net negative undertaking. And then you want to flush this money down the toilet year after year?

C) There's really been a bastardization of the concept of Keynesian economics. "Smoothing" implies borrowing or taking surpluses from good years to fund shortfalls in bad years, but over the past 30 years we've rarely banked that surplus. You're theory fails because ultimately the bills come due, as they are in Europe. Keynesian economics as it has come to be known is not a silver bullet, it does not create value from nothing. For this sort of thing to work the govt would have to demonstrate an ability to get positive ROI, but that's rarely the case. Almost never does the govt spend $1T and get even $800B back, so the policy is not a self-sustaining one without the offsets in good times. It's the definition of throwing more money a bad.

D) You can't fund stimulus and run deficits into perpetuity because govt spending is not self-sustaining. Even the "austerity" debate is under attack as there is little evidence of any reasonable impact/return from "stimulus" spending over the past decade. But let's make a distinction between bailouts (which the govt gets most or all of it's money back, and can be considered positive ROI when compared at the cost of the alternative) and flushing money down the toilet. The problem with these huge deficits and stimulus is you are getting to the point where the debt service is going to offset any benefit you are getting.

gut;1086750 wrote: C) There's really been a bastardization of the concept of Keynesian economics. "Smoothing" implies borrowing or taking surpluses from good years to fund shortfalls in bad years, but over the past 30 years we've rarely banked that surplus.

We haven't had any surpluses. Even the Clinton "surpluses" were just borrowing from Social Security. The debt went up every one of the Clinton years. The real economy has not grown one bit over the last 30 years. Every cent of "GDP growth" has been borrowed from future generations.

That is why centrally planned economies fail. Even if in theory you could save the surpluses during the boom to fund the deficit spending during the bust, if the economy is dependent on the government you would never have surpluses, because the GDP growth is just debt.

Cleveland Buck;1086767 wrote:We haven't had any surpluses. Even the Clinton "surpluses" were just borrowing from Social Security. The debt went up every one of the Clinton years. The real economy has not grown one bit over the last 30 years. Every cent of "GDP growth" has been borrowed from future generations.

That is why centrally planned economies fail. Even if in theory you could save the surpluses during the boom to fund the deficit spending during the bust, if the economy is dependent on the government you would never have surpluses, because the GDP growth is just debt.

Agree about the Clinton accounting tricks. But do you have any support for the bolded? I think that is flat wrong - and how exactly is GDP growth just debt? Debt is not part of the calculation, nor is it a zero sum game. The reason it doesn't really work for the govt is the waste and inefficiency wipes out the multiplier effect.

gut;1086782 wrote:Agree about the Clinton accounting tricks. But do you have any support for the bolded? I think that is flat wrong - and how exactly is GDP growth just debt? Debt is not part of the calculation, nor is it a zero sum game. The reason it doesn't really work for the govt is the waste and inefficiency wipes out the multiplier effect.

Government spending is part of the calculation, and where does the government get the money? It either steals it or borrows it (or borrows it from the printer). The national debt has increased by around $14 trillion over the last 30 years, but the GDP has only increased by around $12 trillion. So that is $14 trillion borrowed and spent by the government and throw into the GDP figure. The whole system is a joke.

Cleveland Buck;1086803 wrote:Government spending is part of the calculation, and where does the government get the money? It either steals it or borrows it (or borrows it from the printer). The national debt has increased by around $14 trillion over the last 30 years, but the GDP has only increased by around $12 trillion. So that is $14 trillion borrowed and spent by the government and throw into the GDP figure. The whole system is a joke.

Yes, but you can back out the govt spending and still see GDP has grown a good bit.

And your math is flat wrong. You don't compare the ends, if real GDP was $5.8T in 1980, and then $5.9T in 1981, that's +$100B. And then if it's $6.0T in 1982, that's ANOTHER +$200B. Like I said, where do you have proof of your statement or are you just pulling numbers out of thin air?

gut;1086821 wrote:Yes, but you can back out the govt spending and still see GDP has grown a good bit.

And your math is flat wrong. You don't compare the ends, if real GDP was $5.8T in 1980, and then $5.9T in 1981, that's +$100B. And then if it's $6.0T in 1982, that's ANOTHER +$200B. Like I said, where do you have proof of your statement or are you just pulling numbers out of thin air?

Whether or not you adjust both numbers for inflation it still tells the same story, debt has grown more than GDP over the last 30 years. That debt was spent into the economy by the government, so it was added to the GDP number.

The GDP in 1982 was $3.2 trillion or so. It is now around $15 trillion.
http://www.usgovernmentspending.com/us_gdp_history

The national debt was around $1.1 trillion in 1982. It is now around $15.4 trillion.
http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms#cite_note-44
http://www.usdebtclock.org/

Cleveland Buck;1086876 wrote:Whether or not you adjust both numbers for inflation it still tells the same story, debt has grown more than GDP over the last 30 years. That debt was spent into the economy by the government, so it was added to the GDP number.

The GDP in 1982 was $3.2 trillion or so. It is now around $15 trillion.
http://www.usgovernmentspending.com/us_gdp_history


The national debt was around $1.1 trillion in 1982. It is now around $15.4 trillion.
http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms#cite_note-44
http://www.usdebtclock.org/

Again, you're not understanding the math. The CUMULATIVE growth in GDP over that 30 years is like, I'll just use the median as a ballpark, $180T....vs $14T more in govt debt. So you point is almost completely off-target.

Cleveland Buck;1086767 wrote:We haven't had any surpluses. Even the Clinton "surpluses" were just borrowing from Social Security. The debt went up every one of the Clinton years. The real economy has not grown one bit over the last 30 years. Every cent of "GDP growth" has been borrowed from future generations.

That is why centrally planned economies fail. Even if in theory you could save the surpluses during the boom to fund the deficit spending during the bust, if the economy is dependent on the government you would never have surpluses, because the GDP growth is just debt.

Yes the GDP growth has mirrored the growing of government debt. It also has mirrored the outsourcing of private jobs and the subsequent balance of trade debaucle the US has endured over that same 30 year period. We at one time were the world's largest net exporters. Today we are the world's greatest net importers. (all this transformation since the sixties.)

We reap what we sow.

The United States has supplanted private sector jobs with public sector jobs over that time period.

Instead of arguing Keynes vs. Hayak or Krugman vs. Mises...the real argument should be....what to do in keeping American private jobs here.

Over the years, I've started several threads on the subject...and listed what should have been done. But no one wants to discuss it.

gut;1086933 wrote:Again, you're not understanding the math. The CUMULATIVE growth in GDP over that 30 years is like, I'll just use the median as a ballpark, $180T....vs $14T more in govt debt. So you point is almost completely off-target.

$180 trillion is not the cumulative growth. It doesn't grow by $6 trillion per year. When they come out with numbers saying GDP growth was 2% that means it grew by $300 billion or something. Where are you getting $180 trillion? That is 3 times the size of the Earth's economy.

Footwedge;1086937 wrote:Yes the GDP growth has mirrored the growing of government debt. It also has mirrored the outsourcing of private jobs and the subsequent balance of trade debaucle the US has endured over that same 30 year period. We at one time were the world's largest net exporters. Today we are the world's greatest net importers. (all this transformation since the sixties.)

We reap what we sow.

The United States has supplanted private sector jobs with public sector jobs over that time period.

Instead of arguing Keynes vs. Hayak or Krugman vs. Mises...the real argument should be....what to do in keeping American private jobs here.

Over the years, I've started several threads on the subject...and listed what should have been done. But no one wants to discuss it.

The loss of jobs overseas is a direct result of our monetary policy and government meddling in the economy.

When dollars are worth less, fewer investors want to hold them. Capital flees countries with weak currencies. It also flees countries with too much regulation, too much taxation, rising input prices, etc. Having real money again would solve these problems.

Another part of the problem is this desire to bring back the jobs that left instead of finding new ones. If we fixed our monetary policy it would bring back some of those jobs because we would be more efficient at producing various things than other countries. But we benefit from buying goods that are made more efficiently elsewhere.

That is like complaining about tractors on farms. How many people lost their jobs to this machine? Should we all be out picking crops for 12 hours a day? Or be happy that a machine does it so we can be employed making something else? In this comparison the protectionist approach would be to outlaw or heavily tax tractors to keep jobs picking crops. That is backwards thinking. The problem is that instead of letting some private entrepreneur find something new for people to do, the government took the initiative of putting people to work doing nothing productive and driving up the cost of labor for any new businesses and pricing them out of the market.

http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/omb-director-undercuts-legal-case-obamacare/376561