Manhattan Buckeye;1426783 wrote:"Or pays people not to work."

Well.....

Sounds like Soviet Union in the 80's.

That worked out well for them.

Manhattan Buckeye;1426731 wrote:How about you speak in plain English? That would serve us all well. It isn't that difficult.

It also makes it easier to convey a point. And don't use words like "paradigm" or other buzzwords. If it is a duck, call it a duck.

I will do my best.

Cleveland Buck;1426745 wrote:Let me try to explain.

First he uses his typical justification for anything. Keynesian Democrat X and Monetarist Republican Y are both wild inflationists, so the idea must be valid.

Then he goes into the Keynesian sticky wages theory that had never been demonstrated in real life until the first depression in which the government actively intervened (1929), and every one since. Of course wages are sticky if the government props them up. Or pays people not to work. Or makes it illegal to work for less than a minimum amount.

Then he takes it for granted that because the government has the monopoly on money, that it should be that way, and they know better than we do what we need. Then he supports that with a ridiculous analogy similar to:

If people need to be clean, would we wait for everyone to take a shower or have a government agent wash every American?

1. Well, although you know my views about now, I wasn't really talking about whether Keynesian or Neo-Monetarist prescriptions are necessarily valid. You and I obviously have differing viewpoints. However, I was responding to Gut who was attempting to Lampoon me by suggesting that only wild-eyed liberals would disagree with David Stockman's views which are closer to a more Austrian interpretation. So, I wanted to point out that a famous Republican who Gut probably sympathizes with would also, likely, disagree with Mr. Stockman's particular approach.

The idea being that you need not be a wild-eyed, partisan keynesian liberal/marxist/socialist to disagree with Mr. Stockman

2. With Regard to sticky wages, indeed, as Keynes described it in the General Theory, this was a characteristic of the modern economy with a central bank and state monetary monopoly. If we'd like to back to a pre-central banking era with wild swings in employment and the price level and with private issuance of "money-things" that is something different and the central points of the General Theory don't apply.

3. Although I think I'd prefer the general stability and economic growth we've had since the Fed was created (and they competently respond to ngdp shocks which is questionable) I never really "took for granted" that it should be that way. I understand that you'd like to change that but I'm not convinced we're suffering the types of calamity of horrors that might suggest we do so.

4. I don't think your analogy is as good as Friedman's. It's relatively easy for governor to decree daylight savings like it would be relatively easy for a monetary authority to lower the Federal Funds Rate whereas it would be pretty difficult, costly and invasive to compel everyone to shower.

5. Feel like I might've contributed to hi-jacking the thread so I will try to comment on the opening topic. In a monetary economy with a fiat currency and free-floating exchange rates and interest rates at the zero bound when there is a current account deficit, it is desirable for the government to to put more of the sovereign currency into the economy whether through more direct government purchases or tax rebates or tax cuts or central bank asset purchases to the point where it matches or is greater than the desire of the non-government sector to save/pay down private debt. So, concerns about the level of government spending being at or near the national median income don't really bear any consequence IMHO.

Manhattan Buckeye;1426783 wrote:"Or pays people not to work."

Well.....

Sounds like Soviet Union in the 80's.

Unemployment is really a phenomenon of the capitalist economy. Even during the 1st Industrial Revolution, prior to central banking and prior to any welfare state, when there was child labor and no one was paid "not to work", there was still periods of mass unemployment and still unemployment.

In our current regime, we could eliminate our welfare state, unemployment insurance and what not and we'd still have unemployment just like there was in the Great Depression when Bread Lines were the welfare state.

To wit?

BoatShoes;1426806 wrote: In our current regime, we could eliminate our welfare state, unemployment insurance and what not and we'd still have unemployment just like there was in the Great Depression when Bread Lines were the welfare state.

You're really losing it. Why does Europe - that economic model you guys love - have persistently lower growth and higher unemployment?

gut;1426847 wrote:You're really losing it. Why does Europe - that economic model you guys love - have persistently lower growth and higher unemployment?

Well Pre Financial Crisis Europe in a lot of ways did suffer from supply-side labor problems in particular however that has nothing to do with where we are now and how to solve the problem now. Context matters.

Europe's problem's now stem primarily from the Euro which is like a gold standard for all the nation's that could devalue their currency pre-Euro and are suffering.

BoatShoes;1426911 wrote: Europe's problem's now stem primarily from the Euro which is like a gold standard for all the nation's that could devalue their currency pre-Euro and are suffering.

In other words, they went from one problem right to another problem? Or more accurately piled yet another problem on top of the persistent one?

LMAO "supply-side" problem - their growth and unemployment have lagged for a few decades, levels completely unacceptable in the US (approximately what we have had under Obama). It's not a "supply-side" problem it's the free rider incentive issue and crushing taxes to support free loaders.

gut;1427557 wrote:It's not a "supply-side" problem it's the free rider incentive issue and crushing taxes to support free loaders.

yessir :thumbup:

believer;1427613 wrote:yessir :thumbup:

Seriously, did Boat just try to dismiss decades of dogsh.it growth on a lack of willing and able labor participants? And makes no connection to the socialist policies that contribute to that?

gut;1427634 wrote:Seriously, did Boat just try to dismiss decades of dogsh.it growth on a lack of willing and able labor participants? And makes no connection to the socialist policies that contribute to that?

There are indeed folks out there who long for Euro-socialism despite its obvious failures. Methinks that despite Boatie's intelligence, he's allowing wishful thinking to cloud the realities.

gut;1427557 wrote:In other words, they went from one problem right to another problem? Or more accurately piled yet another problem on top of the persistent one?

LMAO "supply-side" problem - their growth and unemployment have lagged for a few decades, levels completely unacceptable in the US (approximately what we have had under Obama). It's not a "supply-side" problem it's the free rider incentive issue and crushing taxes to support free loaders.

Well, those are supply side problems. And yes, the de-facto gold standard that is the Euro is the primary problem...completely eliminating social insurance in Spain, Italy and Greece so as to d1scour@ge teh fr33loaders would not cause their disastrous unemployment levels to drop. These supply side problems are ancillary to the main problem. It is like worrying about high cholesterol after the heart attack has happened.

Sweden, with the most generous welfare state in the world, still is suffering from high unemployment and slow growth but it luckily still has its own currency and as we can see is not suffering like those countries tied to the Euro.

And of course, the welfare state in the United States is a pittance compared to those in Europe and yet we have similarly high levels of unemployment to the U.K. and Sweden, both non-Euro countries with much more generous welfare states.

You also forget that Spain destroys your narrative anyway. Spain ran budget surpluses and has a comparatively less generous welfare state....so it is far less "socialist" as you're using the term (nevermind that socialism and keynesian prescriptions for downturns are not even close to the same).

But we've already hashed all of this out haven't we?

The Euro is the problem right now. It needs to be abolished like the Gold Standard.

gut;1427634 wrote:Seriously, did Boat just try to dismiss decades of dogsh.it growth on a lack of willing and able labor participants? And makes no connection to the socialist policies that contribute to that?

It is funny, that is the same argument you are making if you're saying that welfare states, socialism, etc. cause freeloading. Surely you are aware of this. The problems of Europe before have nothing to do with the disaster we're seeing resulting from the Euro.

believer;1427654 wrote:There are indeed folks out there who long for Euro-socialism despite its obvious failures. Methinks that despite Boatie's intelligence, he's allowing wishful thinking to cloud the realities.

The Euro is the big time failure here. We can rest assured that the "Amero" that the Goldbugs lived in fear of in years past will never come to pass after seeing what has gone down on continental Europe.

BoatShoes;1427692 wrote:It is funny, that is the same argument you are making if you're saying that welfare states, socialism, etc. cause freeloading. Surely you are aware of this. The problems of Europe before have nothing to do with the disaster we're seeing resulting from the Euro.

Really? You don't think a collapse of the socialist state, predicted or otherwise, isn't a major contributing factor? You don't think a weaker state and more fragile economy beforehand makes it more susceptible to shocks?

And you don't think that Europe-style socialism encourages freeloading? Do any of these arguments sound remotely familiar to you?

BoatShoes;1427693 wrote:The Euro is the big time failure here.

That's interesting, isn't it? It puts Italy, Greece, etc... on par with CA and IL.

BoatShoes;1427690 wrote: And yes, the de-facto gold standard that is the Euro is the primary problem...

What kind of dribble is this? I used to respect your posts, but now it's like Krugman is literally talking out of your ass.

Again, subpar growth and unemployment has plagued Europe for decades. DECADES....One more time because you apparently don't recognize the issue...DECADES. Hey, kudos to Sweden - they are ONLY suffering from high unemployment and slow growth but are not yet going under.

But these "supply side problems are ancillary to the bigger issue"?!? You don't say, please, go on.

BoatShoes;1427690 wrote: And of course, the welfare state in the United States is a pittance compared to those in Europe and yet we have similarly high levels of unemployment to the U.K. and Sweden, both non-Euro countries with much more generous welfare states.

Not before Obama - to be completely honest and fair. Literally. And hardly a pittance in comparison, but I don't want to detract from the larger point.

BoatShoes;1426800 wrote:
5. Feel like I might've contributed to hi-jacking the thread so I will try to comment on the opening topic. In a monetary economy with a fiat currency and free-floating exchange rates and interest rates at the zero bound when there is a current account deficit, it is desirable for the government to to put more of the sovereign currency into the economy whether through more direct government purchases or tax rebates or tax cuts or central bank asset purchases to the point where it matches or is greater than the desire of the non-government sector to save/pay down private debt. So, concerns about the level of government spending being at or near the national median income don't really bear any consequence IMHO.

What is sad is that you actually believe this.

So, The overall goverment, local to federal, could tax the whole nation at 100% and STILL not have enough money to operate...THAT HAS NO CONSEQUENCES?

You can not possibly be serious.

jmog;1428040 wrote:What is sad is that you actually believe this.

So, The overall goverment, local to federal, could tax the whole nation at 100% and STILL not have enough money to operate...THAT HAS NO CONSEQUENCES?

You can not possibly be serious.

No, what you said was incorrect. I said government spending which has nothing to do with taxes. Taxes function to create a demand for the currency and possibly to control inflation (but we're no where close to that with so much unemployed capital and labor).

Again, in a country where the sovereign government issues the currency at will by typing in numbers into a spreadsheet at the central bank there is no tax or solvency or revenue constraint on the sovereign government's ability to spend. As your post reveals, you are unaware of this. The federal government could eliminate all taxes tomorrow and would still be able to buy and spend whatever it wants because we the people, through our agents in government, are the issuers of the currency (but that would very likely be inflationary). In fact, this point should have been made clear when I suggested that the government could put more money into the economy with tax cuts.

Should be noted however that local and state governments are indeed revenue constrained like the average household as they are not the issuers of the currency.

Whether these are good ideas in a normative sense is one thing but these are operational facts. I for one believe it makes good sense to adjust the level of spending based upon the private sector's desire to save as I suggested in the post you quoted. Obviously, small government folks like Cleveland Buck probably cringe at this thought and thus desire to eliminate fiat currencies but this has been reality since 1973. If you don't believe me, perhaps you'll believe Alan Greenspan.

[video=youtube;q6vi528gseA][/video]

gut;1427951 wrote:What kind of dribble is this? I used to respect your posts, but now it's like Krugman is literally talking out of your ass.

Again, subpar growth and unemployment has plagued Europe for decades. DECADES....One more time because you apparently don't recognize the issue...DECADES. Hey, kudos to Sweden - they are ONLY suffering from high unemployment and slow growth but are not yet going under.

But these "supply side problems are ancillary to the bigger issue"?!? You don't say, please, go on.

Again, I acknowledge Europe's supply side problems. Slow Growth and higher than desirable unemployment is not the same as depression and unemployment rates higher than during the great depression. It is not hard to understand. The inability to de-value because of the Euro is causing this for the periphery just like the inability to de-value because of the Gold Standard really hampered the U.S. during the depression.

I have ideas about how social insurance might be fixed in Europe but even that would not save the periphery while Germany punishes them.

I understood quite well, I didn't disagree with you that the government is not constrained by revenue since they print the money.

What you said, however, was that the fact that total government spending equals the whole country's income combined, "bears no consequence". You meant that it has no consequences which the fact that you believe that is sad.

I never said that they CAN'T do this, I said it has consequences. So your attempt at sounding more intelligent failed. It just made you sound pompous.

gut;1427952 wrote:Not before Obama - to be completely honest and fair. Literally. And hardly a pittance in comparison, but I don't want to detract from the larger point.

You mean, not before the financial crises. You are a smart guy and should reasonably consider that Obama is not a dictator. The budget surplus during the Clinton years set the stage for the dotcom and housing busts under the President Bush and when Obama got into office there was no appreciable increase in the welfare state beyond 1. extension of unemployment benefits and 2. ease on snap and 3. Obamacare which is undoubtedly causing hiring problems.

But, even considering that...we're talking about a welfare state that pales in comparison to Canada, Sweden, Germany, the U.K. etc. You must acknowledge this. You eliminate Obamacare, the minimum wage, unemployment insurance and food stamps and with the FED unwilling to pursue major hardcore asset purchases, the drop in demand is going to matter way more than supply side effects and unemployment would rise.

jmog;1428116 wrote:I understood quite well, I didn't disagree with you that the government is not constrained by revenue since they print the money.

What you said, however, was that the fact that total government spending equals the whole country's income combined, "bears no consequence". You meant that it has no consequences which the fact that you believe that is sad.

I never said that they CAN'T do this, I said it has consequences. So your attempt at sounding more intelligent failed. It just made you sound pompous.

No you said that I suggested that 100% taxation wouldn't have any consequences which I never said anything about taxes. You didn't say anything about the level of government spending. Read your post again.

You said "100% taxation would still not give teh gubmint enough money to operate!?!?" Which shows, necessarily that you didn't understand because the government with a fiat currency necessarily always has enough money to operate as it is just a spreadsheet entry away. You wouldn't have written what you wrote if you grasped this.

I may be missing something, but wasn't the dot com bust under President Clinton's watch?