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

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

    Quote Originally Posted by zstep18 View Post
    Many of FDR's relief programs weren't initiated until around 1935-1936. And in 1937, FDR had actually cut spending. And, there's also the fact that Keynes wrote letters to Roosevelt criticizing him for not doing enough spending.....
    Yep.

    The letter can be found here, although this part is most interesting in regards to the discussion at hand.

    snip

    Quote Originally Posted by John Maynard Keynes
    But in a slump governmental Loan expenditure is the only sure means of securing quickly a rising output at rising prices. That is why a war has always caused intense industrial activity. In the past orthodox finance has regarded a war as the only legitimate excuse for creating employment by governmental expenditure. You, Mr President, having cast off such fetters, are free to engage in the interests of peace and prosperity the technique which hitherto has only been allowed to serve the purposes of war and destruction.
    Last edited by Kushinator; 06-07-12 at 04:11 PM.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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

    Quote Originally Posted by Kushinator View Post
    The level of increased spending was nowhere near the requisite to close the output gap. Typically those right of center tend to confuse the New Deal with Keynes. The General Theory was not publish until 1936, and the notion of running deficits in proportion of the output gap was not initiated until the U.S. enters WWII.

    This is simply a matter of fact.
    Hit the nail on the head.

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

    Quote Originally Posted by Eighty Deuce View Post
    Yeah. OK.

    Let me add for those not so silly. Regarding The Depression, and spending. The last two years of Hoover pursued excessive spending, and the expansion of Government, which are just as much of a cause in sustaining the initial Depression as what FDR continued.
    You made an error in stating that the Banking Act of 1933 (a.k.a. Glass-Steagall) caused a lack of confidence in the banking system. First and foremost, the ridiculousness of the claim should be rather apparent given that nearly half of all banks in the U.S. failed by 1932. Secondly, FDIC insurance is responsible for bringing confidence back to depository institutions.

    As stated earlier, your position stems from an incoherent understanding of contemporary finance.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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

    Quote Originally Posted by Kushinator View Post
    The level of increased spending was nowhere near the requisite to close the output gap. Typically those right of center tend to confuse the New Deal with Keynes. The General Theory was not publish until 1936, and the notion of running deficits in proportion of the output gap was not initiated until the U.S. enters WWII.

    This is simply a matter of fact.
    I did not say Keynes was behind the New Deal.

    I said the New Deal was an example of Keynesian economics.



    And - so everyone is made aware of your understanding (?!?) of economics:


    You have (apparently) said that the New Deal is not an example of Keynesian economics

    AND

    that a budget deficit of 3.6% of GDP (what would today be $566 billion) is 'minimal'.


    Noted.



    Have a nice day.
    Last edited by DA60; 06-07-12 at 04:30 PM.

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

    Quote Originally Posted by Tettsuo View Post
    Why allow the tax cuts to expire when we could just cut everything that makes American society not devolve us into a Somalia-like state?
    "To keep deficits and debt from climbing to unsustainable levels, as they will if the current set of policies is continued, policymakers will need to increase revenues substantially above historical levels as a percentage of GDP, decrease spending significantly from projected levels, or adopt some combination of those two" - CBO

    Treasury estimates the costs of making the tax cuts permanent for everyone is $3.7 trillion over 10 years.

    Of that, $3 trillion accounts for the cost of extending them for the vast majority of Americans, as the president has proposed. The remaining $700 billion is the cost of extending them permanently for the high-income earners.

    So -- ending the Bush tax cuts as President Obama wants will raise $70 billion a year in additional revenue. The United States in FY2012 is running a $1.327 trillion deficit.

    The simple fact is plain for everyone to see (who wants to see it) -- ending the tax cuts are not enough the solve our fiscal issues -- we MUST address the real drivers of spending (which the CBO points to in this report) -- entitlements.

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

    Quote Originally Posted by Kushinator View Post
    You made an error in stating that the Banking Act of 1933 (a.k.a. Glass-Steagall) caused a lack of confidence in the banking system. First and foremost, the ridiculousness of the claim should be rather apparent given that nearly half of all banks in the U.S. failed by 1932. Secondly, FDIC insurance is responsible for bringing confidence back to depository institutions.

    As stated earlier, your position stems from an incoherent understanding of contemporary finance.
    No. This is exactly what I said:

    ... His actions with the banks when he first took office undermined confidence in them.
    At least quote me, or correctly state what I posted, instead of just lying about it, and then criticizing me for something that I did not say.

    Here, from an earlier link that I provided:

    The day after FDR took the oath of office, he issued a proclamation calling Congress into a special session. Before it met, he proclaimed a national banking holiday--an action he had refused to endorse when Hoover suggested it three days earlier.

    Invoking the Trading with the Enemy Act of 1917, Roosevelt declared that "all banking transactions shall be suspended." Banks were permitted to reopen only after case-by-case inspection and approval by the government, a procedure that dragged on for months. This action heightened the public's sense of crisis and allowed him to ignore traditional restraints on the power of the central government.
    You are making stuff up.

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

    Quote Originally Posted by DA60 View Post

    You have said that the New Deal is not an example of Keynesian economics

    AND

    that a budget deficit of 3.6% of GDP (what would today be $566 billion) is 'minimal'.
    And i would be correct in that statement. Anyone who is familiar with Keynesian macroeconomic policy understands that the reason in engaging in deficit spending is to minimize the "output gap". By 1933, unemployment was around 20% and real GDP had fallen by 37% from 1929. Therefore it would take an enormous amount of deficit spending to push the economy back to full employment. And it did.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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

    Apparently conservatives think that government spending - specifically, deficit spending for some unknown reason - is "Keynesian". And that therefore anyone that increases government spending must be "Keynesian".

    I don't think they understand what Keynesian economics was about.
    "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 Eighty Deuce View Post
    At least quote me, or correctly state what I posted, instead of just lying about it, and then criticizing me for something that I did not say.

    Here, from an earlier link that I provided:
    Your statement and link do not support your argument that the Banking Act of 1933 undermined confidence in banks. They were failing by the thousands as depositors fearing their savings would be wiped out caused continuous runs on the U.S. banking system. After the BA was in full effect, the U.S. has never faced another run on depository institutions.

    You are making stuff up.
    Not at all. I am just having a discussion with someone who does not know what they are talking about.
    Last edited by Kushinator; 06-07-12 at 04:41 PM.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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

    Quote Originally Posted by AdamT View Post
    The only idiotic thing we can do right now is NOT borrow more. In real terms, we are presently able to borrow at negative interest rates.
    This is really where no matter the partisan position, it's difficult to counter.

    I think a number of conservatives, and maybe even a few libertarians, would be more inclined to back government spending during a bust, and restraint during a boom if:
    1. Government consistent got it right on how the spend the money
    2. Government got the restraint-part right.

    But part of the issue that I don't see being disucssed much is:

    - Of the tools government has to induce such economic growth (interest rates, spending, etc.), don't they lose much of their effect if we know how and when government will implement them? Don't they get both factored in, and worse, predicted? And those who predict it are most likely the big financial giants....

    Greenspan left interest rates too low after dot-com, presumably leading to a worse housing bubble. Why isn't it more of a calculation than a thumb in the air? Is it a calculation, but they have to seem as random as possible to avoid the "factoring in and prediction" the market would use to counter it?

    And finally, if we know approximately when interest rates will go up, and down (after some recovery, after a crash), can we all make a fortune on that and how?

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