Hi mindmeld; Re: "I think all of you Keynesians are the ones disconnected from reality. Most of you claim that government and consumer spending increases are the path to prosperity, which is why Keynesians always crow about how we need to spend, spend, spend, our way out of recession.";
(1) I'm not a Keynesian.
(2) Prosperity is defined as high GDP per capita. GDP is the sum of government, consumer and business spending. Increases in these numbers are what people call "prosperity". But I'm not in favor of prosperity per se.
(3) Countries get out of recessions by increases in spending. Whether the spending is by the public, business or government does effect things. I'd prefer to see the increase in spending by business and the wealthy but Obama is scaring the crap out of them. In that situation, the only thing left is pretty much government spending.
Re: "And what if every dollar the government spends represents a dollar of taxation from consumer and businesses, which means they can't create the jobs necessary to get this economy out of it's funk?";
You're not making sense. It is simply not the case (for the United States) that "every dollar the government spends represents a dollar of taxation from consumer and businesses". Anyone who reads the news knows that the US does not collect enough taxes to pay for its expenses. Consequently, an extra dollar spent by the government does not come "from taxes". At the moment, with QE, it comes from thin air. Eventually we'll get inflation and the people holding US government debt will have ended up paying that money. That would be the 1% and the Chinese. Over the long run, that's who is paying for the QE, not the 99%.
Re: "Then if all of the above is true, then fiscal and monetary profligacy are holding the economy back, not liberating it."
But it's not all true.
Re: "And the statistics prove that to be the case. Obama has created an average annualized 0.01% jobs growth since he became President."
What the statistics prove is that the average annualized jobs growth has been extremely low. I agree with this fact. In fact, I think the figures are broken and unemployment has probably been getting worse. But that does not show that the QE policy was a bad idea. The problems with jumping to this conclusion include the following: (1) QE is not the only policy that has an effect on jobs. Those of us reading this thread are aware that there are other effects, for example, Obamacare. (2) Even if QE were the *only* policy that effected jobs growth (which is a stupidly simplifying assumption), you cannot conclude that QE was not useful simply from the poor jobs growth. Instead, you would have to make the experiment. That is, you would have to do something like divide the country into two equivalent halves. Apply QE to one half and no QE to the other half, and then compare how the two halves did. My position is that in the absence of QE, the jobs growth would have been deeply negative instead of flat.
Re: "Obama's, Krugman's, and Bernanke's economic policies are squarely responsible for this abysmal growth and that's a fact."
This is simply untrue, and an indication that you are deeply decieved about the economy. And I understand how this happens, your leaders keep telling you that the reason the country is doing well is because of your leaders so eventually you end up believing that everything that happens economically is created by your leaders. And (the stupider) leaders end up believing this. They will tell you crap like "You did not build that".
No!
The economy is not created by the f'ing Federal Reserve and Obama!
The economy is created by the activities of millions of individuals.
Our country's "leaders" have very little control over the behavior of the individuals in this country. They can make stuff we do illegal, but like as not, we'll do it anyway. I'm sure Obama will be quite surprised when he discovers that many millions of people won't buy (over priced) health insurance!
If consumers decide tomorrow that they don't want new cars, the car companies will lose money and will eventually go out of business. There's little the government can do to stop it. And if we decide to eat at home instead of eating out, millions of cooks and waiters will lose their jobs and there is nothing Bernanke or Obama can do about it. If most of us decide that we're going to buy over-priced real estate there's little the Fed can do to stop us, and when we all decide to sell stocks, their prices are going to go down.
The Fed can manipulate interest rates to some extent but that's all. And the Fed can't manipulate them negative.
The bad economy is due to a slowdown in the velocity of money. People are leaving money in their bank accounts instead of spending it. They are saving money. In these circumstances, the economy is destroyed (just as it has been every time in the past when a Capitalist country goes through circumstances essentially identical to the ones we've been through). And eventually it bottoms out.
What's wrong with you is that you do not read economic history. Booms and busts are inherent in capitalism and have been present for 500 years in every capitalist country. There is nothing wrong with booms and busts. This is the way capitalism operates. Under these circumstances, it is essentially impossible for Obama and the Fed to create jobs growth. They have to wait, just like as has happened in every other capitalist country for hundreds of years, until the people in the economy decide to start spending money.
Obama has contributed to the length of the downturn by continuing to scare the rich. That's his fault. But how much has it effected the economy? That's impossible to say because we can't run that experiment. We have only one country with one history. But logically, scaring the crap out of the rich people, when the recession is caused by rich people being scared, is totally stupid. That was his error. QE is a matter of making the bottom not as deep as it otherwise would be.
The deep absence of historical knowledge on my hard money friends is worrisome. They are unaware of the boom/bust cycles this country went through long before the Federal Reserve even existed. These busts were so severe that people were begging in the streets and businesses went bankrupt. And they were very lengthy. This was under a gold standard regime, you can't blame the length and depth on quantitative easing and this was before the Federal Reserve existed so you can't blame it on the Federal Reserve:
In the United States, economists typically refer to the Long Depression as the Depression of 1873–79, kicked off by the Panic of 1873, and followed by the Panic of 1893, book-ending the entire period of the wider Long Depression. [4] The National Bureau of Economic Research dates the contraction following the panic as lasting from October 1873 to March 1879. At 65 months, it is the longest-lasting contraction identified by the NBER, eclipsing the Great Depression's 43 months of contraction. [5] [6]
In the US, from 1873–1879, 18,000 businesses went bankrupt, including hundreds of banks, and ten states went bankrupt, [7][ dead link] while unemployment peaked in 1878, long after the panic ended. Different sources peg the peak unemployment rate anywhere from 8.25% [8] to 14%. [9]
en.wikipedia.org
As usual, it started with a financial panic:
en.wikipedia.org
These depressions have always been world-wide. They are not caused by any political party because there is no political party that is simultaneously in control of the countries of Europe, Asia, North and South America, and Australia. They are just the booms and busts of capitalism and over the long run, they are no big deal. They are caused by the fact that humans are an imitative animal and large numbers of them tend to do the same thing at the same time. Booms happen when a lot of humans start spending their money freely, busts happen when they cut back on spending.
Growth continues before and after these busts. But each time one has happened recently, the Democrats have used it as a method of adding more socialism to our system. And that is the long-term problem.
-- Carl |
