The Stimulus Seems to have failed
- Thread starter Skeptic
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[Shrug.] Well, you wouldn't have had it, because the 800 billion dollars was created by Congress through deficit spending. No tax revenues involved in the here-and-now, which is exactly what Keynes suggests is exactly the way that economic slowdowns should be addressed.
You can start being deficit-hawk-ish again when the next bubble starts. That will not only help pay back the stimulus funds, but it will also restrain the bubble from growing. Of course, it will also keep the few fortunately placed people and companies at the forefront of the bubble from making obscene unearned profits, but we know that you're only interested in the good of the country, and not simply a shill for corporatist interests, right?
Chris L
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The 800 billion wasn't created by anyone yet. Congress has no power to create wealth. Take wealth from others yes, but not create it. The wealth they took this time hasn't been earned yet. The money that was borrowed has to be paid back by other people and generations.
As to your aspirin example, no I wouldn't blame the aspirin. I would blame the doctor who prescribed it, if what I really needed was something else. While I was wasting my time with aspirin, the condition that was really causing the headache was getting worst, perhaps beyond repair. But you are right, it is not the aspirin's fault.
As to your aspirin example, no I wouldn't blame the aspirin. I would blame the doctor who prescribed it, if what I really needed was something else. While I was wasting my time with aspirin, the condition that was really causing the headache was getting worst, perhaps beyond repair. But you are right, it is not the aspirin's fault.
That's right. It wasn't wealth, it was money.
They haven't taken wealth from anyone. They simply conjured money out of thin air, in accordance with Keynesian principles. The existing money supply wasn't circulating fast enough, so they made more money (that would circulate more slowly), enough to keep the wheels of commerce turning.
... and when every competent doctor agreed that aspirin was indeed the appropriate treatment, whom would you blame for your recurring headache?
The parallels with YEC are becoming more and more obvious. You've decided a priori that the stimulus was inappropriate, despite the fact that you don't even understand how it worked -- and you're assuming without any sort of reason or evidence that the "doctor" is wrong in his diagnosis, despite a near-universal consensus against you on the part of the actual experts in the field.
Chris L
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There is a difference between wealth and money. When you borrow $1000, you are not really $1000 richer. You are $1000 more liquid, but not richer. The money you borrowed has to be paid back. The wealth that will be needed to do that has not been earned yet.
I judged the "doctor" by the results. If the guy said the aspirin would end it, and it didn't, I assume he is wrong.
I judged the "doctor" by the results. If the guy said the aspirin would end it, and it didn't, I assume he is wrong.
If you actually understood this, then you would understand why it was necessary for Congress to create money to preserve wealth.
So, first you imagine what (wrongly) what the doctor says, and then you blame him when it doesn't do what you thought he said it would,... and ignore the evidence that it's actually working.
The "willful ignorance of evidence" parallel is simply piling up, isn't it?
Chris L
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Sorry, but the doc in this case charged me (well my descendants really) $800 billion for the aspirin. If it didn't work, the money was wasted.
There are people looking at 99 weeks on unemployment and the housing market is in free fall. But yeah, the aspirin is doing its job.
There are people looking at 99 weeks on unemployment and the housing market is in free fall. But yeah, the aspirin is doing its job.
Well, the other diagnosticians are pointing out that the aspirin has "created or saved 3.3 million jobs." But I guess you have to (willfully) ignore that.
Chris L
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No, but I can't ignore the fact that those unemployed are still unemployed, that the housing market isn't getting any better, and there doesn't seem to be any way to repay the money spent. It really doesn't take much effort to "save or create" jobs if you are willing to spend $800 billion you don't have. The trick is to create an environment where private businesses create jobs that will make paying back the money a bit more likely.
BeAChooser
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No. Why'd you ignore my post dk?
lomiller
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The theory that things would have been worse without the stimulus can be tested by calculating the number of jobs created+saved. If this is zero you have falsified the theory, it’s not.
However, it’s almost like you think the results need to be falsifiable…
And here it’s almost like you don’t know that argument from legitimate authority is a perfectly valid argument form…
Just a tip, if you are going to try and use these concepts you should at least make minimal efforts to understand them first.
lomiller
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IOW you are worried that the to few jobs were created/saved, something that comes from the stimulus being too small.
So I'm glad we agree, then, that the stimulus did in fact save or create jobs.
Apparently you're complaining that the stimulus wasn't large enough. You're in good company, then. Most competent economists agree with you.
Well, what's the GDP now vs the GDP when the stimulus was passed?
Higher GDP generally equates to higher federal revenue, so the money's already being paid back. We've already got some pretty good numbers on the TARP funding in particular -- and it's hard for me to complain about a program yielding 8.5%.
Not quite. If congress monetizes $800 billion in debt, it is you and I who are paying most of this tax now. Our descendants will be on the hook for some of the interest. When congress spends newly created fiat money, whether it is created debt-free by an act of political will, or whether it is created by a central bank and attached to a promissory note, the results are mostly the same: Certain privileged people consume scarce goods and services from an economy where everyone else has to exchange their labor.
Like I said, no rational person opposed the stimulus. Here's Tippit to demonstrate the truth of that statement.
What they're not pointing out, is that we're in a recession, and those jobs should not be saved. Recession is the collective realization that we've misallocated a lot of productive resources (eg: housing, wall street finance).
Of course, government jobs, unlike other jobs, are funded by force - coercive taxation. So while the private sector, who voluntarily supplies goods and services that people need and want implodes, the public sector cannibalizes what's left, and their mostly useless jobs get protected. The public sector is able to force people to subsidize them via taxation, and when that isn't enough, they're able to force them to accept a currency which they perpetually devalue via the inflation tax.
The fact that wall street banks, and mega corporations that are effectively satellites of government got bailed out is a tragedy, not a success. This is the dirty truth of "economic stimulus". The fact that as our credit dries up that Bernanke will be doing most of the taxing doesn't change the reality of the taxation, only the method - one which most people, especially our beloved "expert" DrKitten don't seem to understand. Either that or, being a member of the parasitical class, willfully misunderstands to his financial benefit.
Yes, being rational actors, they try not to point out things that aren't true.
lomiller
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I actually though the 2001 recession should have been allowed to run its course without stimulus. The root cause was vastly overbuilt networking and computer infrastructure. When the dot com bubble burst investment in this infrastructure dried up and the implications were felt by most other business. Consumer sentiment remained strong and didn’t end being very hard for the fed to fight off deflation so there was almost no risk of a broad economic collapse.
Instead, of letting things run their course, however, there was fairly strong stimulus applied, and not only that the stimulus was designed to extend well past the end of the recession.
Instead, of letting things run their course, however, there was fairly strong stimulus applied, and not only that the stimulus was designed to extend well past the end of the recession.
stilicho
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I can think of at least one other major news event in 2001 that threatened consumer and investor confidence. Perhaps pulling the plug in 2003 may have made more sense.
Growth in the US is slowing right now but is it really reversing course?