As much as I want everyone to be employed, it isn't a taxpayer obligation. If you believe otherwise, then you should probably live in a communist country, because the US Constitution isn't for you. Creating taxpayer sponsored busy-work isn't creating wealth, or growing the economy. If you want an economy that's closer to full employment, then lets abolish the Fed, which is the cause of asset inflation and speculative bubbles. The bust phase of the fiat-money fractional reserve banking system is the cause of the unemployment. If you were a physician, what you're advocating would be based on a complete misdiagnosis, with a prescription for cyanide.
From the fed charter:
The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.
http://www.federalreserve.gov/aboutthefed/section2a.htm
I don't think the fed is doing enough on that score, but it's clearly a founding obligation.
As for the taxpayers, "obligation" is just distraction. We weren't "obligated" to do health care reform or provide social security or fight wars or anything, really. It's a matter of what policy is best.
In this case, stimulating the economy and creating employment opportunities is better for the people and our finances.
So, not only should the Federal Government and the Federal Reserve borrow more, and print more money to bail out bankers and insurance companies, it should provide states that have completely mismanaged their budgets with even more funding. That's truly astounding, that you believe this is a good thing.
Who gets punished when you take this moralistic stance towards the economy? I only care who's fault it is in so far as correcting the problems is the focus. If we wag our fingers at the states and chastize them for being irresponsible, it just means lots of teachers lose their jobs and cities fall apart.
Not to mention that (setting aside California) many of the states are having crushing budget problems because of factors beyond their control. They made financial commitments based on the quality of the economy before the collapse. It's not Kansas' fault that Wall Street speculators and gigantic banks were irresponsibly leveraging against risky financial instruments. But after the economy collapsed, their revenue bottomed out. It would have been wise to bailout that debt, allow them to reorganize their budgets from a secure position, and move forward. We just left them hanging, a terrible choice. The stimulus was cut off at the knees because of this decision.
Krugman's economic kool-aid is beneath me. I replied to one of his blog postings and debunked his lies point-by-point on another thread. And yes, Krugman is a liar, because he's smart enough to know what his economic proposals mean, and who benefits. I only wish I could ignore hacks like him, if only economists like him weren't ruining our country.
I don't know if Krugman farted on your dinner plate, or what, but your irrational hatred of the man is comically misguided. Krugman is arguing for increased stimulus precisely to help out the people that are suffering now and will suffer more with the imposition of austerity measures.
He opposed the blank-check style bailouts of the financial industry, was arguing that people notice the housing bubble years before it burst, and has been BY FAR the strongest progressive voice on economics over the last 20 years. You'e simply upset that his multiple decades of economic work makes him to qualified to accept your bizarre views.
Do you realize that
the Fed is secretly monetizing US government debt hand over fist, thereby suppressing (manipulating) interest rates? People are falling over themselves to lend us money? What are you smoking? Someone
forgot to tell China, our largest creditor. The only reason global demand for US Treasuries has spiked recently, is due to the abysmal state of the alternatives! This situation will end sooner rather than later.
I followed the links and the origin seems to be a gentleman named Chris Martenson who basically writes end-times economic porn. There's nothing substantial in his conspiratorial fear-mongering. I don't understand why you would whine about Krugman, a peer-reviewed, Nobel prize winner, and listen to some internet conspiracy theorist. Amazing.
Additionally, the article on China describes them selling bonds because of political gamesmanship. I don't see how this reflects poorly on our economy. I suppose it's one of the inevitable "we're all doomed because China owns us" arguments, but with as much money as they've lent us, they want our economy to be strong as much as we do. It's just more paranoia.
You're an ostrich with your head in the sand. We have the mother of all asset inflation in the US Treasury bubble, in the midst of a global meltdown in sovereign debt, of which the US will be the last house-of-cards standing. Mark my words.
We'll wait and see, I guess. People have been making this claim for a couple of years now, and the indicators haven't supported them one bit.
Color me surprised at your "solution". Please, since we can borrow and print our way to prosperity, with absolutely no negative consequences, why should we ever stop? No really. Why should we worry about the debt at all, ever? I'd love to hear your rationale, and please, no more Krugman links, I want to hear what you think.
What "I" think is based on the work of people who study the economy for a living. Just like my opinion of global warming is based on the work of climate scientists, not walking outside and seeing if it's hot, I don't presume to be an expert on economic issues.
I am, however, an expert on argumentation. I can read discussions between experts in a given field and understand who is presenting the more compelling case. I then learn as much as I can from those people. Krugman is an infinitely more reliable source for economic information than me. That is why I cite his work.
If you had actually read any of the links provided you would realize that no one (save, perhaps, Dick Cheney) thinks the debt is meaningless. It's a question of how to move forward in eliminating long-term deficits and the debt. Using funds borrowed at insanely low rates to stimulate the economy in order to pay off those obligations in the future is the responsible course of action in the current economic climate.
No one suggests borrowing like that forever. This is a strawman based on a misunderstanding of the issues. I even linked you a post by an economics professor that overtly described proper action in crisis vs. secure times. You're swinging at windmills.
You've already admitted you're basically a layman, and most of your contributions have been regurgitating Krugman blog posts. Yet you're wrong about virtually every aspect of the current financial crisis, from how and why it started, to how to fix the mess. You concede nothing, and pretend that everything will be ok as long as we simply do more of what has caused this disaster.
Right, citing authority is such a terrible way to progress. You've just made unsubstantiated assertions backed by no data. The posts I'm linking include 1) expert argument and 2) the data it was based on. You ignore both and just say the same thing over and over without substantiation.
You haven't made an argument here, either, just complained.
Why is borrowing forever a terrible idea? Please elaborate.
Look, I offered you a link that explained this, and you ignored it. You will ignore what I post here and just say the same things over and over. Here's the explanation again, in full, because obviously you fear links:
Consider a $100 billion boost to government purchases or cut in taxes financed by borrowing from abroad. In a normal year, the Federal Reserve will worry about inflation, and raise interest rates somewhat to offset the inflationary impact of the fiscal boost. The multiplier will thus be something like 0.4—we will spend $100 billion on government purchases or tax cuts and gain perhaps $40 billion in extra production and associated employment out of it.
But there are costs. First, the added national debt. The national debt will not rise by the full $100 billion: Those who earn that extra $40 billion will pay taxes—perhaps $16 billion. Thus the net impact on the government debt will be that by spending an extra $100 billion we will have added some $84 billion to the national debt. That debt must then be amortized. At a 4 percent per year long-run real rate of interest on government bonds, amortizing that debt will cost Americans $3.4 billion a year.
Second, the higher tax rates needed to raise the extra $3.4 billion will also exert a cooling supply-side effect on economic activity. With higher tax rates, people will have greater incentive to spend time and energy dodging their taxes rather than doing useful work. If this effect amounts to roughly one-third of the revenue raised, then we have to add to the total cost an additional $1.1 billion shortfall from the time and energy that would have been used to produce stuff but that will instead be devoted to dodging taxes.
Third, there is another effect. The Federal Reserve’s fight against inflation, which demands an increase in interest rates, will have reduced investment. Due to the $100 billion in government purchases, perhaps $40 billion of private investment that would have been made won’t be made—it will be crowded out. As a result of the lower capital stock, some $4 billion a year of income that would have been earned won’t be. Thus the net cost of the $100 billion in government spending will be a reduction in Americans’ disposable incomes of $7.4 billion per year.
That’s an unattractive bargain. It would allow us to purchase $40 billion of extra production and income this year at the cost of a reduction in incomes of $11.9 billion—call it $12 billion—in every year in the future. That is a usurious annual real interest rate of 30 percent. No sane economist would recommend a policy with such high costs and meager benefits. Expansionary deficit-boosting fiscal policy is, or ought to be, simply a non-starter in normal times.
I suppose time will tell whether I'm paranoid, or you're ignorant. I've got a lot of money where my mouth is, and I sincerely hope that you aren't betting on Krugman. If so, you're going to get hurt badly, like millions of other Americans and people around the world.
Betting on Krugman how? Do I think we're going to get another round of stimulus? Not really. But if we don't stimulate the economy and we get another dip or a prolonged recovery, how does that reflect poorly on Krugman? He's prescribing a course of action. The only way to lose a bet on Krugman is for the government to follow that prescription and have it fail.
We're going to get hurt because people wringing their hands over the unlikely potential of inflation scare politicians into inaction or worse, austerity measures.
