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Thread: US Debt Could Double in 25 Years With Current Policies

  1. #121
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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by Khayembii Communique View Post
    Or you could read his book and actually understand what Keynes was talking about in his own words?



    Of course you would, because you have to because you've never studied Keynesian economics so you need to rely on a definition that you looked up in a dictionary.
    I provided more definitions above.

    One apparently from the Financial Times.


    And please try and use common sense...obviously ANY definition will not encompass an entire theory...it is a simplification.

    But they show that to call the New Deal NOT a Keynesian-style economic 'device' is utterly ridiculous.

    The New Deal and all FDR (and most of Hoover's) Keynesian-style government interventions were horrible failures.

    They resulted in an average unemployment rate of over 17% for 9 years AFTER the Great Depression had peaked and resulted in the DOW actually going down from mid-'33 until mid '42.

    So naturally, Keynesians want to try and distance themselves from those policies by trying to say that they were not Keynesian-style policies...when CLEARLY they were.


    Then as now..Keynesianism does not work for dealing with recessions/depressions.

    It is for mooches and theoretical, macro-economic ignoramuses (like Paul Krugman) and does nothing but suppress growth and massively increase national debt.
    Last edited by DA60; 06-08-12 at 09:02 AM.

  2. #122
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    Re: US Debt Could Double in 25 Years With Current Policies


    But they show that to call the New Deal NOT a Keynesian-style economic 'device' is utterly ridiculous.
    It certainly could be called Keynesian-inspired but it definitely wasn't actually Keynesian in that it was not part of a general governmental economic plan to increase government spending to offset private sector contraction, which is the entire point of Keynesian economics.

    But hey, you don't even know what Keynesian economics is so it's understandable that you wouldn't understand this.
    "I do not claim that every incident in the history of empire can be explained in directly economic terms. Economic interests are filtered through a political process, policies are implemented by a complex state apparatus, and the whole system generates its own momentum."

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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by Khayembii Communique View Post
    It certainly could be called Keynesian-inspired but it definitely wasn't actually Keynesian in that it was not part of a general governmental economic plan to increase government spending to offset private sector contraction, which is the entire point of Keynesian economics.

    But hey, you don't even know what Keynesian economics is so it's understandable that you wouldn't understand this.
    You disagree with definitions from dozens of respected online publications (including the Financial Times, apparently) as to the simplified definition of Keynesian economics.

    They are respected (some more then others).

    You are not.

    Whom should we believe?

    You or them?
    Last edited by DA60; 06-08-12 at 09:24 AM.

  4. #124
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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by AdamT View Post
    I'm saying that Fitch wants to see a long-term plan that addresses structural deficits, and just as importantly, they want to see evidence that our government isn't completely disfunctional. I think they understand that we will have to run significant deficits for the next few years.
    Here is the problem I have with the above. For the last three years we have heard the same speech from Bernanke and the administration. We need to run big deficits in the short term, but in the medium term we need to get the under control. Well many view the medium term as meaning 3-5 years. So when will we ever get to that. Seems like it should have been 2013 if the policies that the administration worked, we would not still need trillion dollar deficits.

  5. #125
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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by Blue_State View Post
    They downgraded us because we can't set a budget. The Senate refuses to pass a budget. Those are the people you should be targeting. Congress has passed a ton a budgets since it has gotten out of the hands of the Dems. I know...Pelozi couldn't pass a budget because it might hurt the Dems during the 2010 elections. Ooops.
    S&P downgraded the U.S. on August 5, 2011 (and rightly in my opinion). Fitch has had the U.S. on negative outlook, but has not downgraded the U.S., yet. How the U.S. handles its "fiscal cliff" issues (2001 and 2003 tax provisions + fiscal commitments agreed in August 2011 to raise the debt ceiling) will determine its next move.

    In general, when trying to assess the U.S. credit rating, one must look at all the elements involved:

    1. Fiscal: Structural imbalances go back to myriad Tax Code changes and entitlement programs. Costs of dealing with the financial crisis and ensuing recession have also contributed, as have the costs of three conflicts (a component of which will continue even when the conflicts are over e.g., health-related expenses for injured Vets, etc.). No credible medium-term fiscal consolidation strategy (emphasis on medium-term is important) has been enacted. Even the Simpson-Bowles package that would have made a reasonable downpayment toward a larger medium-term fiscal consolidation strategy was not adopted.

    2. Political Risk: The process worked badly during the debt ceiling negotiations, narrowly averting a self-inflicted crisis, and resulting in an inadequate fiscal consolidation solution. Now, even as the solution was inadequate, some political leaders are trying to role back the cuts e.g., the sequester involved, without offering concrete and realistic alternatives. The sequester is suboptimal, as it will have a national security impact, but I believe that approach is better than one that involves mainly gimmicks or no solution at all. Indeed, S&P has warned that if those modest cuts do not take place, it could downgrade the U.S. to 'AA' from its current 'AA+' rating.

    3. Macroeconomic Risk: The long-term growth rate is likely less than the 3% real annualized figure still assumed by S&P. S&P has not yet accepted that condition, but it would likely lead to an additional downgrade if it were to do so. The long-term growth rate is a combination of the nation's debt overhang (broad domestic nonfinancial debt, led by households and the federal government), structural factors (domestic and international), and public policy. All of those factors interact and the boundaries can be quite ambiguous e.g., public investment choices made in the past can, to some degree, impact structural factors such as workforce quality today.

    Specifically, S&P's rationale for the downgrade was:

    The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predicatable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently...

    Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated soverieng peers...

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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by DA60 View Post
    Definition of 'Keynesian Economics'
    An*economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.

    Read more: Keynesian Economics Definition | Investopedia
    With all due respect, the Investopedia definition is a caricature. Keynesian economics lays out a role for government in helping manage the economy. It argues for an expansionary fiscal policy during periods of economic weakness to address an output gap and for mopping up the stimulus during periods of growth. U.S. policy makers have had a bias for accommodation. They've focused on the first element, but ignored the latter one. Due to that bias for accommodation, once the economy has strengthened, one has not seen a concerted policy effort to mop up the stimulus. As a result, temporary spending measures have often been extended, as have temporary tax cuts. The end result has been a greater accumulation of public debt than would have been the case were the latter aspect of Keynesian economics applied.

    For those who are interested, Keynes's classic work, The General Theory of Employment, Interest, and Money can be found here: http://cas.umkc.edu/economics/people...eralTheory.pdf
    Last edited by donsutherland1; 06-08-12 at 11:14 AM.

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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by donsutherland1 View Post
    With all due respect, the Investopedia definition is a caricature. Keynesian economics lays out a role for government in helping manage the economy. It argues for an expansionary fiscal policy during periods of economic weakness to address an output gap and for mopping up the stimulus during periods of growth. U.S. policy makers have had a bias for accommodation. They've focused on the first element, but ignored the latter one. Due to that bias for accommodation, once the economy has strengthened, one has not seen a concerted policy effort to mop up the stimulus. As a result, temporary spending measures have often been extended, as have temporary tax cuts. The end result has been a greater accumulation of public debt than would have been the case were the latter aspect of Keynesian economics applied.

    For those who are interested, Keynes's classic work, The General Theory of Employment, Interest, and Money can be found here: http://cas.umkc.edu/economics/people...eralTheory.pdf
    Very well stated, thanks

  8. #128
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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by zstep18 View Post
    Yes, World War II got the United States out of the Depression. No, FDR did not cause the Depression. That is just false.
    He didn't cause it, but he extended it, and created generations of Americans who have fed off the government teet since. It was the beginning of oversized government, which the Constitution was written to prevent.

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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by donsutherland1 View Post
    With all due respect, the Investopedia definition is a caricature. Keynesian economics lays out a role for government in helping manage the economy. It argues for an expansionary fiscal policy during periods of economic weakness to address an output gap and for mopping up the stimulus during periods of growth. U.S. policy makers have had a bias for accommodation. They've focused on the first element, but ignored the latter one. Due to that bias for accommodation, once the economy has strengthened, one has not seen a concerted policy effort to mop up the stimulus. As a result, temporary spending measures have often been extended, as have temporary tax cuts. The end result has been a greater accumulation of public debt than would have been the case were the latter aspect of Keynesian economics applied.

    For those who are interested, Keynes's classic work, The General Theory of Employment, Interest, and Money can be found here: http://cas.umkc.edu/economics/people...eralTheory.pdf
    With respect - I understand that a definition is a simplification; as I typed in a post above:

    'obviously ANY definition will not encompass an entire theory...it is a simplification.'

    But my point was the New Deal DEFINITELY was - as you typed - 'an expansionary fiscal policy during periods of economic weakness'.

    If running yearly deficits for almost a decade that averaged 3.5% of GDP to try and stimulate an economy is not Keynesian economics (or, part of it) then I do not know what it is.
    Last edited by DA60; 06-08-12 at 11:20 AM.

  10. #130
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    Re: US Debt Could Double in 25 Years With Current Policies

    Quote Originally Posted by donsutherland1 View Post
    From CNBC:



    News Headlines

    The CBO's entire report can be found at: http://www.cbo.gov/sites/default/fil...et_Outlook.pdf

    Supplemental material accompanying the report can be found at: CBO | The 2012 Long-Term Budget Outlook
    The aggregate value of the debt is not the issue, its the ratio of the debt to the GDP. As long as the economy grows at 2.5% or better, a doubling of the debt in 25 years means we are no worse off then than now.

    Many people carry a mortgage on their 2nd house that is much bigger than their first, but they make more money as their career matures and that bigger mortgage is actually a smaller burden than the original.

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