believer;1114224 wrote:[video]http://www.funnyordie.com/videos/528088038f/hitler-s-crazy-rant[/video]

ptown_trojans_1;1114209 wrote:The world is not going to end. The sky is not going to fall. Obama is not Stalin or Hitler or any crazy Commie.

Manhattan Buckeye;1114400 wrote: The same article was in WSJ Asia - really shocking what could happen if the Fed normalizes interest rates.

gut;1114424 wrote:Are we already on an irreversible course to default one day? I can see nary a politician willing to preach the tough medicine that is needed. Most of these politicians are wealthy and will survive a default comparatively unscathed. Yet it's the average Americans - the votes these politicians are so afraid of losing by making the tough choices - that will be devastated in a default. So the politicians choose power...career politicians. And the average American is too short-sighted and ignorant to see that cutting my SS 15% today leaves me better off than in a world where my SS checks buy 1/3 of what they do today.

believer;1114436 wrote: Quite honestly I'm beginning to believe that inflating our way out of the debt crisis (national and consumer mortgage debt especially) is to inflate our way out of it. Short of national bankruptcy, it's just about the only other financial tool left in the tool box.

Manhattan Buckeye;1114399 wrote:"I'm in a unique perspective, as I'm in NOVA and Western Maryland, two areas that have a moderate population. And, my colleagues are a mixed crowd, so I get the analytical R perspective,"

Moderate is a term of art, but that area is the ONLY area that has benefited from BO's administration's statist policies, at the expense of the rest of the country.

BGFalcons82;1114071 wrote:After you pull Obama's joystick on election day, make sure you order Rosetta Stone. Get the Mandarin version. It will be quite popular bout 2015 and supply will be limited. Get a head start on the rest of us!

gut;1109176 wrote:Again, you're missing the boat here (no pun intended).

Reagan's increase were coming off lower GovX....His % increases reflect much lower increases as a % of GDP. You're comparing Apples & Oranges. Obama has put bloated, out-of-control govt spending on steroids. The comparison is laughable.

What you're GovX + Investment shows, non-Keynesians would argue, is the infamous crowding out effect. Businesses are retrenching, and Investment shows this (if we don't take them at their word) because of the piss poor fiscal policy coming out of Washington. An increase in GovtX isn't going to fix this, and many would say that's what we've seen with a couple of failed stimulus attempts. Keynesians just want to throw more stimulus at the problem. It ain't working and it isn't going to work.

The US has fiscal austerity?!? Wow, what an academically dishonest statement (from an INSEAD professor, no less, and that's a fantastic school). Trying to claim $1T+ deficits and spending at historical highs as a % of GDP is austerity is almost moronic.

Re-elected with 61 percent of the vote in 1936, President Franklin D. Roosevelt told his supporters, "Now I'm going back to do what they call balance the budget." True to his word, he cut spending and promptly sent the nation into a recession -- a sharper decline than in 1929.The orthodox wisdom in Washington in 1937 remained cutting spending, reducing taxes and balancing the budget to restore business confidence. Punitive taxes on investments and capital gains and "unreasonable restrictions" on finance had put businessmen into "a state of stagnation if not panic," critics of the New Deal argued. Uncertainty was the main reason the economy was in a slump, declared the U.S. Chamber of Commerce. The conservative "Brass Hats" of the National Association of Manufacturers told Roosevelt to end social-welfare policies and get tough with labor if he wanted to reduce unemployment. Chase National Bank President Winthrop Aldrich said it was time to "dismantle the anti-business elements of the New Deal."
Many in the Roosevelt administration also believed business confidence was key. Treasury Secretary Henry Morgenthau Jr., a close friend of the president, promoted the "Treasury view" that government spending merely crowded out private investment. The only way out of the Great Depression, Morgenthau said, "was through restoring business confidence." The liberal Securities and Exchange Commission Chairman William O. Douglas believed that corporate executives were "marking time" and going on vacation rather than investing their firms' cash. Roosevelt himself never completely shook off his view that balanced budgets were a good thing. He had chastised Herbert Hoover for big deficits in the 1932 campaign and cut the wages of federal workers by 15 percent when he took office. His behavior in 1936 was completely in character.
But Roosevelt and his New Dealers would eventually give up conventional thinking on government spending. Business confidence gave way to demand management as the policy of the Democratic Party. That story is well-known. More surprising is that liberal politicians and economists were supported by a range of business leaders. Within five years of the 1937 recession, part of the business community had formed a "growth coalition" centered on the proposition that only government spending could end the Depression -- and thus save capitalism.
One of the more unexpected business voices for growth and spending was a Republican Mormon banker named Marriner Eccles. From a wealthy Utah family, Eccles had taken charge of his father's construction business and diversified into finance and other areas. His company survived the Depression, but he learned that austerity and savings were self-defeating. "In seeking individual salvation," he wrote, "we are contributing to collective ruin." The grim ironies of Depression economics had led him "face to face with the proposition that the only way we could get out of the depression was through government action."
Appointed chairman of the Federal Reserve by Roosevelt, Eccles was unable to get his fellow Fed governors to embrace a more liberal monetary policy. But he was an early supporter of Keynesian fiscal stimulus.
Gradually other business leaders came to conclusions similar to Eccles. Charles E. Wilson, president of General Electric, called for spending to restore full employment. Progressive manufacturer Henry Dennison dismissed businesspeople who clung to laissez-faire ideology as the "lazy fairies."
Dennison joined forces with Paul Hoffman of Studebaker, advertising executive William Benton, and top managers from Eastman Kodak, General Foods, Sears and General Motors in the Committee for Economic Development in 1942. Fearful that the economy would slip back into a depression once World War II ended, they advocated an activist state that spent money to promote consumption and high employment. Their position was hardly radical, and they aimed their appeal at "all who are interested in keeping the system of private enterprise and larger personal freedom." But they understood that capitalism could survive only if there was a way to "counter the tendencies toward boom and depression." Capitalism required growth, by whatever means necessary.
The growth logic took time to penetrate the rest of the business community. Even after the great spending surge of World War II wiped out unemployment, the National Association of Manufacturers and the Chamber of Commerce continued to argue that government deficits were "job destroying." This "strange thinking," Hoffman told the NAM, would "fasten upon us an economy of scarcity."
But soon even the Chamber of Commerce took the plunge and joined the growth coalition. Under the dynamic leadership of Eric Johnston, it supported the Full Employment Act of 1946, a Keynesian, albeit conservative, embrace of government spending to reduce the boom-and-bust cycle that Hoffman feared. Johnston, a wounded veteran of World War I, had built up the largest appliance distributorship in the Northwest, starting out as a door-to-door vacuum-cleaner salesman. This Main Street entrepreneur understood that capitalism couldn't survive on a starvation diet. "We can't afford to go into another tailspin," he told the Chamber's staff. "Another depression would mean the loss of our system."
Growth now took precedence over the conventional thinking on balanced budgets and the ideology of market self-regulation. After World War II, the U.S. embraced a Keynesian anti-depression economics that united business, government and labor. That coalition would endure for the next 40 years of prosperity.
(Kenneth Lipartito is a professor of history at Florida International University. His co-written history of corporate social responsibility will be published in 2012. The opinions expressed are his own.)

believer;1114436 wrote:The problem is even if those career politicians make the tough choices and cut SS 15% to make us better off in the long-run, there will be an equal number of career politicians who know that those SS checks equate to votes. In other words the same politicians will find a way to offset the cuts to maintain political power.

Quite honestly I'm beginning to believe the only way out of the debt crisis (national and consumer mortgage debt especially) is to inflate our way out of it. Short of national bankruptcy, it's just about the only other financial tool left in the tool box.

BoatShoes;1114750 wrote:I'm afraid not. If there had been crowding out, interest rates would have risen and they did not;.

BoatShoes;1114752 wrote:Pretty good op-ed at Bloomberg today I'd say. It is amazing how the people who have been wrong in this day and age repeat the same arguments that were wrong in the 30's.

http://www.bloomberg.com/news/2012-03-12/how-the-depression-made-keynesians-of-capitalists-echoes.html

gut;1114777 wrote:OHHHHH, but the fed funds rate is at 0 - that has an impact as it competes for capital. And the crowding-out effect goes that the rate of return doesn't attract private capital. You're argument that interest rates would rise implies there's never a crowding out effect, but in reality the risk-adjusted returns are what matters, and in a recession/muddle through economy the rate that gets it done doesn't work for one or both of investor/debtor.

Most of the $8T loss in housing value is a paper loss..."Equity" value locked-up in the home until sold. It was only in the housing bubble that people were re-financing to withdraw that equity - a mostly unusual step. From a normative perspective, that has little impact. You could argue people feel less wealthy and so take less risky investments, but ultimately most people do not sit on much cash.

You can't argue for austerity when we are spending $1T more in deficits and spending more than ever than just a few years ago. You simply can't, it's a fraudulent argument. Austerity? If I didn't know you better I'd honestly think you were making a joke.

QuakerOats;1114824 wrote:Also from Bloomberg today:Obama’s Stimulus Helped Grow Debt, Not Economy: Ramesh Ponnuru


Last week’s release of the February employment report set off the predictable partisan squabbling, with Democrats emphasizing the positive (227,000 new jobs) and Republicans the negative (the still-shrunken labor force and still-high unemployment rate).
Democrats say the economic recovery shows that the stimulus bill that President Barack Obama signed in 2009 worked. Republicans deny it. Although we can’t know how the economy would be faring if Congress hadn’t passed a stimulus, we have good reason to doubt that it did much good.
Media fact-check organizations have no such doubts. Factcheck.org says it’s “just false” to deny that the stimulus has created jobs. It cites the Congressional Budget Office’s estimate that the stimulus had saved or created millions of jobs. But the CBO, as its director has explained, hasn’t really checked the effect of the stimulus. It has merely reported what the results of additional federal spending and tax credits would be if you assume that spending and tax credits are stimulative.
In other words: If you assume that stimulus works, it must have worked. This circularity doesn’t bother PolitiFact, a group that seeks to elevate the tone of our political debates but usually lowers it. Relying on the CBO and other groups that use similar methods, it says people who deny the effectiveness of the stimulus have their “pants on fire.”
The Research

Last summer, Dylan Matthews reviewed the research on the stimulus for the Washington Post and dug up six studies that found a positive effect. Three of them were based on models that assume the stimulus worked. Three of them were supposedly empirical confirmations of this effect. These three all found that states (or counties) that got more stimulus money had stronger economic performances than places that received less.
But nobody denies that the federal government can shift the distribution of economic activity. If Congress were to give me $50 billion, I am sure car dealerships and liquor stores in my area would see an uptick in sales. That doesn’t mean the nation as a whole would come out ahead. (I am willing to go along with the experiment if Congress doubts this.)
Other research on the stimulus, meanwhile, has uncovered reasons for skepticism about its effect. John F. Cogan of the Hoover Institution and John B. Taylor of Stanford University have found that the federal aid to states that was in the stimulus reduced states’ borrowing. The transfer may have helped state balance sheets, but shifting debt from states to the federal government cannot have been stimulative. The stimulus didn’t increase federal purchases significantly, they said.
Valerie Ramey of the University of California, San Diego, has found that the stimulus didn’t increase economic output or private-sector employment, although it boosted public-sector employment. (Maybe PolitiFact will give these economists a pants-on-fire citation, too.)
In a recent debate about the stimulus with Taylor, former Obama adviser Lawrence Summers made the point -- a dubious one, as we’ve seen -- that states with more stimulus funding have done better. He also urged the audience to “use your common sense.” That’s probably the best argument for the stimulus: Keynesian theorists can tell a plausible story about why one would expect additional federal borrowing to help a depressed economy.
But what’s often left out of that story is the role of the Federal Reserve. Take account of how fiscal policy is likely to affect monetary policy, and it becomes a lot harder to see how stimulus can do much to help the economy.
Fed’s Effect

Assume, for example, that the central bank has a strict 2 percent target for inflation and is perfectly effective in hitting it. In that case, any stimulus that Congress provides is and must be canceled out by a tighter monetary policy. Or assume that the central bank always achieves a target of 4.5 percent growth in nominal income. Again, any added stimulus just causes the Fed to run a more contractionary (or less expansionary) monetary policy, and we end up with roughly the same level of output and employment.
The Fed in these situations may want Congress to provide stimulus, as Fed Chairman Ben S. Bernanke has repeatedly urged, because the central bank would prefer to be able to run a tighter policy itself. But listening to him would merely change the mix of fiscal and monetary policy that reached the same result.
That doesn’t mean Keynesian stimulus can never work. As Scott Sumner of Bentley University points out, it can work under certain monetary regimes. But we seem to have a central bank that wants to keep inflation in a narrow band, and this disposition limits the potential effect of any fiscal policy on the performance of the economy.
Some proponents of stimulus make the counterargument that the crisis of 2008-2009 created an unusual “liquidity trap” in which the Fed, because of low interest rates, couldn’t run a sufficiently expansionary policy. But our government was perfectly capable of pursuing a highly expansionary one in 1933, when interest rates were low, and the Fed has been able to pursue unconventional policies in this crisis, too.
In retrospect, Obama would have been better off pushing for more Fed action in 2009 -- for instance, the Fed could have stopped paying banks interest on reserves, announced a goal of restoring nominal income to trend, or both -- and skipping the unpopular stimulus. The economy would probably be in the same shape, and we would certainly have less federal debt.

http://www.bloomberg.com/news/2012-03-12/obama-s-stimulus-helped-grow-debt-not-economy-ramesh-ponnuru.html

BoatShoes;1114859 wrote: I mean, look at Spain and Ireland, where is the "crowding in" that your view suggests would take place? It is non-existent! It sounds good on paper but doesn't the real world happening of events have an effect on this belief?

Cleveland Buck;1115016 wrote:Inflating to pay the debt is a great idea. Starve the poor and working suckers to pay off the bankers that hold the national debt. Talk about wealth redistribution. That will go over great with the progressives, at least the ones who know anything about what is going on.

gut;1115026 wrote:we'd see a large decline in the standard of living in so far as those dollars buy less globally.