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-- Obama Lied; The Economy Died
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the newspapers are fucked

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Originally posted by Clovis I can't wait till December.

Indeed; I rather preferred when these people were relegated to shouting from the street corners. One of the unfortunate side effects of the internet is that one has to dig a little deeper to realize just how ridiculous they are.

With that in mind, I looked Mr. Denninger up. It seems he keeps an online resume. However--rather unsurprisingly--it contains no hints as to the source of his macroeconomic expertise. In fact, I found it rather notable that it contains no indication of any education at all.

But I suppose we should nonetheless carefully consider his unsupported predictions when making important policy decisions. After all, he has a blog!

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Originally posted by Arbiter Indeed; I rather preferred when these people were relegated to shouting from the street corners. One of the unfortunate side effects of the internet is that one has to dig a little deeper to realize just how ridiculous they are. With that in mind, I looked Mr. Denninger up. It seems he keeps an online resume. However--rather unsurprisingly--it contains no hints as to the source of his macroeconomic expertise. In fact, I found it rather notable that it contains no indication of any education at all. But I suppose we should nonetheless carefully consider his unsupported predictions when making important policy decisions. After all, he has a blog!

I have this thread bookmarked for reference at a later date.

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Originally posted by Clovis George Bush did nothing conservative?

nope, there wasnt much fiscally conservative about the bush administration at all. Huge increase in government and in spending, and its a disgrace that a republican congress let him get away with it for so long.

I have no idea how you are attempting to blame tax cuts for our current economic situation. Can you make a specific connection between the two? (rather then "look at the last 8 years")

Money is always better off in the hands of those who earned it, it holds more value to them. The out of touch beauracrats in washington put little value for tax payer dollars which leads to waste.

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Originally posted by Capitalizt Even if they don't spend the money and chose to save or invest it instead, it would still do a hell of alot more good for the country than if the government gets it's greedy claws on it. Money is never doing "nothing" unless it is being truly useless by sitting under a mattress. Fortunately most rich people don't put their money under a mattress. They tend to put it into banks which then lend money to entrepreneurs and consumers..or they invest it in other productive enterprises which create jobs and wealth. Contrary to what the left believes, money left in the hands of the people who earned it is never "lost" or "wasted". It is always working to improve the economy in one way or another..and each dollar is likely to do much more good in their hands than under the direction of a disconnected bureaucrat in Washington.

I couldnt agree with you more.

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Originally posted by djjoshuaallen I have no idea how you are attempting to blame tax cuts for our current economic situation. Can you make a specific connection between the two? (rather then "look at the last 8 years")

That's never been the insinuation - tax cuts didn't create the crisis, but they sure as hell won't solve it. I've yet to see a single person address the one empirical fact that ruins the tax cut argument. The fact that only 16% of money transferred back into the hands of taxpayers last year by George W. Bush was spent. What sort of stimulus does that make if only 16% actually stimulates the economy, and the rest goes to pay down debt or evaporate into the bowels of the stock market? I'm all for personal liberty, but this has nothing to do with it. We need to stimulate consumer demand, and tax cuts don't cut it.

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Money is always better off in the hands of those who earned it, it holds more value to them. The out of touch beauracrats in washington put little value for tax payer dollars which leads to waste.

Can you account for the fact that a much greater proportion of government spending stimulates aggregate demand than tax cuts do? Can we not at least agree that this is the problem right now? How do you propose transferring money back to people who won't spend it is a better idea than spending it in such a way that 75% of it goes directly toward stimulating demand. Do I wish that number was 100%? Hell yes. I was very disappointed to see so much of the stimulus wasted on tax cuts.

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Originally posted by Lebezniatnikov The fact that only 16% of money transferred back into the hands of taxpayers last year by George W. Bush was spent. What sort of stimulus does that make if only 16% actually stimulates the economy, and the rest goes to pay down debt or evaporate into the bowels of the stock market? I'm all for personal liberty, but this has nothing to do with it. We need to stimulate consumer demand, and tax cuts don't cut it.

Your arguement only holds weight here because of the timing, which was one where most people had recently been over extending themselves for years with debt which is one of the leading reasons for this crisis in the first place. That is why they chose to pay down debt, that and the looming credit crunch that instilled fear in the consumer. Your arguement has little relevance when held against the idea overall that putting more money in the hands of the consumer does in fact stimulate economic growth.

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Originally posted by Lebezniatnikov Can you account for the fact that a much greater proportion of government spending stimulates aggregate demand than tax cuts do? Can we not at least agree that this is the problem right now? How do you propose transferring money back to people who won't spend it is a better idea than spending it in such a way that 75% of it goes directly toward stimulating demand. Do I wish that number was 100%?

I cant agree with you here either because the jobs that will be created by 500+ billion in government spending will be completly dependant on the government dollars, temporary, and will not produce the private sector jobs that make the american economy what it is. Im not sure how you have drawn your conclusions as to how the stimulus money will directly stimulate the economy, yet putting money in the hands of consumers will not. Do you frown on the american consumer for being reponsible with their spending for once? However, not all of us over extended ourselves into debt, but I applaud those who paid there bills with the little bit of extra money they recieved, although the government would rather them have spent it and an additional $600 plunging themselves into even more debt.

Governement still has yet to come up with a well established plan moving forward, or a solution to the real problems with our financial system. In the meantime, we need to suffer for our wreckless spending and save our cash and pay off our debts. It will hurt now, but recovery will come much faster. This can come faster with more expendible income in the hands of the consumers.

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Originally posted by djjoshuaallen Your arguement only holds weight here because of the timing, which was one where most people had recently been over extending themselves for years with debt which is one of the leading reasons for this crisis in the first place. That is why they chose to pay down debt, that and the looming credit crunch that instilled fear in the consumer. Your arguement has little relevance when held against the idea overall that putting more money in the hands of the consumer does in fact stimulate economic growth.

Well timing is everything, no? Why advocate a policy that is ill-timed?

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I cant agree with you here either because the jobs that will be created by 500+ billion in government spending will be completly dependant on the government dollars, temporary, and will not produce the private sector jobs that make the american economy what it is. Im not sure how you have drawn your conclusions as to how the stimulus money will directly stimulate the economy, yet putting money in the hands of consumers will not.

It's simple - tax refunds don't get spent. Employing people, even through temporary government-funded infrastructure projects does. What's likely to generate more demand in the economy, a tax refund or a new cohort of workers receiving paychecks? Furthermore, who do you think the government is contracting to do all of these projects? The answer is the private sector - government isn't spending for the sake of spending - it's spending to inject money directly into the private sector through contracts and wages (that will go toward payments on food, rent, etc.). The issue here is finding a semi-efficient way of increasing demand so that the private sector doesn't continue to contract - contraction leads to corporations failing, layoffs, etc. Stimulating demand ensures that these companies can succeed and that taxpayers can play around with their $50,000 salaries instead of their $600 tax refunds.

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Do you frown on the american consumer for being reponsible with their spending for once?

Not at all. But I'm focused on the greater issue - the Americna economy. Private finances of individuals are far less important than saving the economic system that allows individuals to finance anything.

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Governement still has yet to come up with a well established plan moving forward, or a solution to the real problems with our financial system. In the meantime, we need to suffer for our wreckless spending and save our cash and pay off our debts. It will hurt now, but recovery will come much faster. This can come faster with more expendible income in the hands of the consumers.

What data are you basing this on? Have you seen something to show tax cuts being more effective this time around than they were last time? All I've seen is data that suggests the opposite. You're right that the issue is income in the hands of the consumers - and tax refunds don't do much good when you're unemployed.

quote:

Originally posted by Arbiter Indeed; I rather preferred when these people were relegated to shouting from the street corners. One of the unfortunate side effects of the internet is that one has to dig a little deeper to realize just how ridiculous they are. With that in mind, I looked Mr. Denninger up. It seems he keeps an online resume. However--rather unsurprisingly--it contains no hints as to the source of his macroeconomic expertise. In fact, I found it rather notable that it contains no indication of any education at all. But I suppose we should nonetheless carefully consider his unsupported predictions when making important policy decisions. After all, he has a blog!

haha, yeah im amazed at how many people capitalizt listens to about economics when they aren't actually economists.

I didn't take that article seriously but did find it amusing .and thought it fit well with the "economy died" theme of this thread.

Things are going to get bad over the next few years but not that bad..at least not until the next super duper massively reflated fiat money bubble economy pops..and I don't expect that for 5-10 yrs.

My thesis has always been that world governments and central banks are going to succeed in going through one final period of massive reflation..throwing everything they have at the problem to prop things up again...and once debt levels get completely unmanageable and become impossible to pay down with a sound currency, they will finally be forced to let go and inflate them away.. At that point people will lose all faith in their money..and since faith is the only thing backing paper money these days, that is when the shit will really hit the fan and we will probably see circumstances like the article mentions.

I like bursted bubbles.

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Originally posted by Lebezniatnikov It's simple - tax refunds don't get spent. Employing people, even through temporary government-funded infrastructure projects does. What's likely to generate more demand in the economy, a tax refund or a new cohort of workers receiving paychecks?

First off, I am not for "tax refunds" in the form of a stimulus check. I didnt agree with what bush did last year, borrowing billions to give us all $600. All I am advocating is lower taxes. There is a difference. However I just happen to think that tax payer dollars being spent in washington will not go as far as consumer dollars being spent by consumers. Spending on our part will create more demand and jobs in the markets then spending on the goverments part dollar for dollar, i dont doubt that.

Can you elaborate on how the IRS brought in more tax revenues under the Bush adminsitration with lower tax rates, than under the Clinton administration with higher tax rates?

Additionally, government funded infrastructure projects are not fixing anything, at best they will provide a false sense of ease. I wouldnt continuously throw oral gel on a tooth if it needs a root canal. Yea the pain may go away temporarily, but you still need the root canal.

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Originally posted by Capitalizt My thesis has always been that world governments and central banks are going to succeed in going through one final period of massive reflation..throwing everything they have at the problem to prop things up again...and once debt levels get completely unmanageable and become impossible to pay down with a sound currency, they will finally be forced to let go and inflate them away.. At that point people will lose all faith in their money..and since faith is the only thing backing paper money these days, that is when the shit will really hit the fan and we will probably see circumstances like the article mentions.

well, im glad that you keep making these ridiculous predictions because most of us cant wait to come back and laugh at these notions in a few years from now

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Originally posted by Lebezniatnikov That's never been the insinuation - tax cuts didn't create the crisis, but they sure as hell won't solve it. I've yet to see a single person address the one empirical fact that ruins the tax cut argument. The fact that only 16% of money transferred back into the hands of taxpayers last year by George W. Bush was spent. What sort of stimulus does that make if only 16% actually stimulates the economy, and the rest goes to pay down debt or evaporate into the bowels of the stock market?

How about the return to normal consumption levels after people get out of the debt that's holding back their current purchasing power? When you say "evaporate into the bowels of the stock market", what do you mean? I honestly don't know how stocks work, I thought companies could use that money invested in their stock to make improvements to their business, so doesn't it work the same as stimulus?

Anyway, my main thought is this: People can only 'spend' money that they have... we're in the middle of a credit-correction right now, ie. Too much credit has been handed out to people who can't afford to pay it back (isn't that what eventually triggered the Great Depression?), and now that they can't buy things anymore with their borrowed money, worse, they've defaulted on their debts and the banks are getting NOTHING in return, the economy has tanked.

I responded directly to your question on people paying down their debt with stimulus money in another thread, here:

http://www.tranceaddict.com/forums/...15&pagenumber=7

Can you please check out my post (ignore the sentence where I blame Clinton, lol, I now realize there's much more to it than that), and respond to my thoughts? I'm not an economist, nor have I done any research on economic policy, I'm just thinking out loud using my own sense of financial logic.

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I'm all for personal liberty, but this has nothing to do with it. We need to stimulate consumer demand, and tax cuts don't cut it.

The best way to stimulate consumer demand, by my own personal, non-economist logic, is to help get them out of debt so they can afford to purchase things. We need to get consumers out of debt (and better yet, educate them on prudent financial management) so that they can afford to purchase things again.

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Originally posted by Spam The best way to stimulate consumer demand, by my own personal, non-economist logic, is to help get them out of debt so they can afford to purchase things. We need to get consumers out of debt (and better yet, educate them on prudent financial management) so that they can afford to purchase things again.

but who is saying that consumers aren't buying because of all their debt??

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Originally posted by pkcRAISTLIN but who is saying that consumers aren't buying because of all their debt??

That's a fair question. I suppose it would be said that people have stopped spending money because those who had credit, but couldn't pay it back began defaulting and going bankrupt. Which led to the subprime crisis. Which led to the banks tightening up their credit, leading to the media's "sky is falling" headlines causing consumer confidence to erode, and leading to the consumer tightening their purse strings to save money/pay down debt, to prepare for the impending doom and gloom of the coming recession. Which of course led to businesses making less money and having to contract. Which of course leads to a recession ACTUALLY happening.

I would argue that if people have no/low debt, they would have the confidence to purchase things with money they would otherwise allocate to debt repayment/saving. I maintain that if the credit market was simply regulated, that these types of credit-bubble recessions would be much better prevented, if not stopped outright from ever occurring, if or until, of course, someone can show me that my opinion is wrong.

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Originally posted by djjoshuaallen Additionally, government funded infrastructure projects are not fixing anything, at best they will provide a false sense of ease. I wouldnt continuously throw oral gel on a tooth if it needs a root canal. Yea the pain may go away temporarily, but you still need the root canal.

So you'd rather we do absolutely nothing?

Fucking hell talk about paper thin arguments...

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Originally posted by Clovis So you'd rather we do absolutely nothing? Fucking hell talk about paper thin arguments...

I wouldnt say do nothing, but im all for getting to the inevitable rock bottom asap so we can start a recovery, no sense in drawing this out another few years. Im for a stimulus plan primarily focused on much needed infrastructure, but not one that is thrown down our throats and rushed through congress with fearmongering tactics.

If they are not sure that this will even work, then what the fuck is the rush? Rather then borrowing from foriegn investors and indebting our kids, lets work out the real problems with the financial system so our recovery will be maximized. I have heard nothing about solutions to the actual problems that lye in our financial system

Why dont we start with helping out a broke ass CA so I can get my 1k they owe me on my tax return.

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Originally posted by Spam How about the return to normal consumption levels after people get out of the debt that's holding back their current purchasing power?

the problem with the current economic situation is that the 'normal consumption levels' are not what we have experienced. People were making purchases based on paper wealth. when people think disposible income = personal income + unrealized assest appreciation, there is a major problem when assets don't actually appreciate. we are about to enter a decade in which credit will be evaluated based on actual income and not potential income. consumption levels are returning to a more 'natural state' (at least a long term sustainable level).

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Originally posted by Spam When you say "evaporate into the bowels of the stock market", what do you mean? I honestly don't know how stocks work, I thought companies could use that money invested in their stock to make improvements to their business, so doesn't it work the same as stimulus?

The only time a company gets money from investments in stock is in an IPO or when the company directly sells an interest. When an investors purchases a stock in the stock market the investor is purchasing the stock from another investor. the money from that exchange doesn't make it to the company. The company does benefit from these transaction, however, in that the company can use it's treasury stock as a means to purchase other companies, and as collateral to borrower funds. So, the company indirectly benefits from higher stock prices.

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Originally posted by Spam Anyway, my main thought is this: People can only 'spend' money that they have... we're in the middle of a credit-correction right now, ie. Too much credit has been handed out to people who can't afford to pay it back (isn't that what eventually triggered the Great Depression?), and now that they can't buy things anymore with their borrowed money, worse, they've defaulted on their debts and the banks are getting NOTHING in return, the economy has tanked. I responded directly to your question on people paying down their debt with stimulus money in another thread, here: http://www.tranceaddict.com/forums/...15&pagenumber=7 Can you please check out my post (ignore the sentence where I blame Clinton, lol, I now realize there's much more to it than that), and respond to my thoughts? I'm not an economist, nor have I done any research on economic policy, I'm just thinking out loud using my own sense of financial logic. The best way to stimulate consumer demand, by my own personal, non-economist logic, is to help get them out of debt so they can afford to purchase things. We need to get consumers out of debt (and better yet, educate them on prudent financial management) so that they can afford to purchase things again.

Consumers don't change behaviors as rapidly as you may think. If a consumer went from 200,000 in debt to 0 in debt, that person isn't likely to spend all 20K he is now saving because he doesn't have to pay a mortgage. A good percentage of that is likely to stay in a bank account. Since banks aren't lending, money in the banks isn't necessarily being caught up by the multiplier effect. The result of helping consumers pay down their debt in the current economic situation is as follows:

1) Banks receive the payoff increasing their balance sheet (trading good assets (cash) for questionable assets (loans in todays market);
2) banks maintain strict lending policies and much of the funds from the payoffs are hoarded by banks;
3) consumers save more because they don't have as much debt, which results in more money being held by banks not willing to lend except to the most credit worthy consumers (consumers worried about losing their jobs aren't likely to spend in case of layoffs).

In addition, directly paying off consumer debts is simply a transfer of a specific debt of an individual to a collective debt of society. I'm sure there are plenty of people on this board that either (i) don't pay taxes or (ii) don't pay a significant amount of taxes. If you don't pay taxes, it's much easier not to care as much about how the funds are used or from where the money originates. For those of us who pay taxes that amount to a teacher's salary in alabama (or more), I can say without hesitation, we don't want to pay our own debt, plus 1/150,000,000 [the amount of taxpayers] of the debt of every other person.

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Originally posted by djjoshuaallen I wouldnt say do nothing, but im all for getting to the inevitable rock bottom asap so we can start a recovery, no sense in drawing this out another few years. Im for a stimulus plan primarily focused on much needed infrastructure, but not one that is thrown down our throats and rushed through congress with fearmongering tactics. If they are not sure that this will even work, then what the fuck is the rush? Rather then borrowing from foriegn investors and indebting our kids, lets work out the real problems with the financial system so our recovery will be maximized. I have heard nothing about solutions to the actual problems that lye in our financial system Why dont we start with helping out a broke ass CA so I can get my 1k they owe me on my tax return.

I dunno if you noticed, but unemployment is skyrocketing and people aren't buying anything. When people don't buy things, companies do badly. When companies do badly, the stock market does badly.

As for "helping out broke CA" I guessed you missed the part in the stimulus bill with a couple billion dollars in aid for struggling states that is sorely needed.

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Originally posted by Clovis As for "helping out broke CA" I guessed you missed the part in the stimulus bill with a couple billion dollars in aid for struggling states that is sorely needed.

I guess you missed the part where i wanted my tax refund, I lent CA 1k last year and I need it back now so i can go spend it in miami and create jobs. The 22 Billion they are getting is most likely spoken for already, for whatever the wasteful beauracrats in sacramento have decided on.

WAKE UP OUR GOVERNMENT IS FAILING US, AND BANKRUPTING US!

quote:

Originally posted by Lebezniatnikov It's simple - tax refunds don't get spent. Employing people, even through temporary government-funded infrastructure projects does. What's likely to generate more demand in the economy, a tax refund or a new cohort of workers receiving paychecks? Furthermore, who do you think the government is contracting to do all of these projects? The answer is the private sector - government isn't spending for the sake of spending - it's spending to inject money directly into the private sector through contracts and wages (that will go toward payments on food, rent, etc.). The issue here is finding a semi-efficient way of increasing demand so that the private sector doesn't continue to contract - contraction leads to corporations failing, layoffs, etc. Stimulating demand ensures that these companies can succeed and that taxpayers can play around with their $50,000 salaries instead of their $600 tax refunds.

Government can't create demand without offsetting demand somewhere else.

Plus the solution above is just a temporary one. Those infrastructure jobs are all short term and not career type jobs. When the individual construction project is complete, bye bye employment... get back in the job search line.

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Originally posted by Spam I honestly don't know how stocks work, I thought companies could use that money invested in their stock to make improvements to their business, so doesn't it work the same as stimulus?

Companies only receive money for stock issuance in an IPO or a secondary offering from their own coffers of treasury stock. Otherwise, all stock is just publicly traded back and forth between millions of people making directional gambles for one reason or another.

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Originally posted by The17sss Government can't create demand without offsetting demand somewhere else. Plus the solution above is just a temporary one. Those infrastructure jobs are all short term and not career type jobs. When the individual construction project is complete, bye bye employment... get back in the job search line.

That's never been the point - the infrastructure job stimulates the economy by increasing demand and getting the private sector back up off its knees. It's like an injection, not a permanent infrastructure bonanza - by injecting capital flow into the heart of the economy, it can restart circulation - when those construction workers have jobs, they're going to spend money, stimulating private businesses that are selling more goods. Likewise, it's private construction firms that are contracting with the government - they in turn interact with the rest of the economy in a way that is beneficial for the system.

Tax cuts that don't get spent aren't helpful at all in the short term simply because the economy continues to tank along with consumer confidence. Is fiscal discipline a bigger issue that will need to be dealt with? Yes, but it simply is not the answer for the dire problem we face right now.

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Originally posted by The17sss Government can't create demand without offsetting demand somewhere else.

that's not true. Demand is created by spending money. If people are putting money in the bank, and banks aren't lending, there isn't demand. Government spending will create demand, and only potentially offsetting future consumption by taxpayers.

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Originally posted by The17sss Plus the solution above is just a temporary one. Those infrastructure jobs are all short term and not career type jobs. When the individual construction project is complete, bye bye employment... get back in the job search line.

the hope is that the construction jobs lead to increased spending by those workers during the terms of their employment, which leads to private jobs creation because of that spending. In addition, all of these companies need lawyers, accountants, and other professionals, who hopefully will also spend their increased earnings. The intent of these packages isn't to supplant private demand, but only get the ball rolling again so private consumers start spending again.

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