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Thread: Obama Releases $3.4 Trillion Budget Plan

  1. #91
    Educator nerv14's Avatar
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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by Truth Detector View Post
    Silly me, I thought you wanted an answer to this:



    I had no idea you just wanted to enter into meaningless quarrels and parrot DNC talking points so that you could maintain your stubborn notions about Obamanomics.

    I have a degree in Finance and graduated with high honors; what is your degree in and how much study in economics did you have?
    DNC talking points and Obamanomics...
    I am talking about common economic theory. Anyway, that is specifically what refuttes Obama's policies of higher taxes and more welfare. Obama's policies of high government spending is a poor choice when the economy is doing well, but not if there is a recession.

    When you got your degree in finance, are you saying that you learned that short term government spending does not move the aggregate demand curve to the right? Since a recession is when the aggregate demand or aggregate supply curve shifts to the left, government spending will directly counter a recession.

    Ive taken eco 101 so far but I doubt the courses would contridict, I can still trust the class that government spending increases aggregate demand.

    Did you learn something that says that defecit government spending doesn't help you leave a recession? If the actual GDP is below potential, then government spending can correct the inballance.
    Last edited by nerv14; 05-08-09 at 08:29 PM.

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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by nerv14 View Post
    DNC talking points and Obamanomics...
    I am talking about common economic theory. Anyway, that is specifically what refuttes Obama's policies of higher taxes and more welfare. Obama's policies of high government spending is a poor choice when the economy is doing well, but not if there is a recession.

    When you got your degree in finance, are you saying that you learned that short term government spending does not move the aggregate demand curve to the right? Since a recession is when the aggregate demand or aggregate supply curve shifts to the left, government spending will directly counter a recession.

    Ive taken eco 101 so far but I doubt the courses would contridict, I can still trust the class that government spending increases aggregate demand.

    Did you learn something that says that defecit government spending doesn't help you leave a recession? If the actual GDP is below potential, then government spending can correct the inballance.
    Courses contradict because professors disagree. It sounds like you have a Keynesian professor and have taken his word to be undoubted truth.

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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by nerv14 View Post
    When you got your degree in finance, are you saying that you learned that short term government spending does not move the aggregate demand curve to the right? Since a recession is when the aggregate demand or aggregate supply curve shifts to the left, government spending will directly counter a recession.
    The problem with Keynesian economics is that it is very short term.
    To properly judge whether or not an action is positive we must look over the long term and micro analyze what happened.

    Quote Originally Posted by nerv14 View Post
    Ive taken eco 101 so far but I doubt the courses would contridict, I can still trust the class that government spending increases aggregate demand.

    Did you learn something that says that defecit government spending doesn't help you leave a recession? If the actual GDP is below potential, then government spending can correct the inballance.
    The more logical answer is that it does nothing but prop up specific industries already destined to fail. It is a form of life support.
    It violates the principles of a balanced economy that at times must contract if it has expanded.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by Harry Guerrilla View Post
    The problem with Keynesian economics is that it is very short term.
    The problem with Keynesian economics is that is the crack cocaine of economic theory.

    For proof, just look at 1937. FDR attempted to reign in government spending and the economy spiraled down again. Four years of "stimulus" had zero lasting impact.

    Government largesse doesn't grow an economy, nor does it stimulate an economy. It merely makes a nation addicted to government largesse.

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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by celticlord View Post
    The problem with Keynesian economics is that is the crack cocaine of economic theory.

    For proof, just look at 1937. FDR attempted to reign in government spending and the economy spiraled down again. Four years of "stimulus" had zero lasting impact.

    Government largesse doesn't grow an economy, nor does it stimulate an economy. It merely makes a nation addicted to government largesse.
    Its possible that it could have a short term positive effect.

    Its short term though and not lasting. It makes no sense in the long run.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by Dav View Post
    Courses contradict because professors disagree. It sounds like you have a Keynesian professor and have taken his word to be undoubted truth.
    Moving the aggregate demand curve by government defecits is just one part of Keynesian economics that actually makes sense. Many of its other theories about easy money (despite increased bubbles appearing) seems incorrect though.

    Don't dismiss all Keynesian economics from some of its faults. If someone has a source where an economist says that defecit spending in a recession is a bad idea I can check that out.

    Quote Originally Posted by Harry Guerrilla View Post
    The problem with Keynesian economics is that it is very short term.
    To properly judge whether or not an action is positive we must look over the long term and micro analyze what happened.



    The more logical answer is that it does nothing but prop up specific industries already destined to fail. It is a form of life support.
    It violates the principles of a balanced economy that at times must contract if it has expanded.
    You still aren't answering my responce about shifting the aggregate demand curve by government spending when it slips below the potential Real GDP. I thought you had a degree in finance?

    I agree that sometimes the economy must shrink because of a bubble. (That is when the Real GDP is above potential GDP.)
    [B]However, it is understood that at this point the potential of the US economy is not being used to its advantage. [/B/(when GDP is below potential) and therefore, shifting the GDP closere to the potential GDP by government defecit spending is a good idea.

    If anyone believes that there is still an unpopped bubble in this economy, I would like to hear that. Only then would defecit spending in general be a bad idea during a recession. However, most people seem to agree that the economy is actually functioning worse then it should.



    We do have to look at all of the effects of action to help the economy. But I got the impression that you were against all defecit spending to try and help the economy.

    But no, government defecit spending is not propping up weak industries that is giving money to a failing company. Normal defecit spending effects the whole economy as a whole, and doesn't benefit one industry much more then another. (for instance, defecit spending for infrasture will benefit engineering firms, but it won't only benefit the ones that are failing)

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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by celticlord View Post
    The problem with Keynesian economics is that is the crack cocaine of economic theory.

    For proof, just look at 1937. FDR attempted to reign in government spending and the economy spiraled down again. Four years of "stimulus" had zero lasting impact.

    Government largesse doesn't grow an economy, nor does it stimulate an economy. It merely makes a nation addicted to government largesse.
    Actually, when FDR and Hoover defecit spended that actually was not macroeconomic policy that would help the economy.

    Hoover was a complete idiot to increase the top bracket income taxs to 90% to try and ballance the budget, and FDR was also really stupid to not change that, even if his more spending increases helped.

    Even though they increased spending, they had increased taxes so much from the 20s that their spending could not make up for the insane increases in taxes.

    Tax decreases and increased government spending has the same effect, by increasing Real GDP. Therefore, since there was large government spending with even larger tax increases that wouldn't help the economy.


    It was from a misused Keynesian economic tactic, so it doesn't reveal any flaws in the theory.

    As a side note, when Kennedy was about to experience an recession he cut taxes to avoid that. Yes, it caused a defecit, but it helped the economy so it was worth it. Decreasing taxes is simillar to increasing spending to help the economy, thats Keynesian economics that worked.

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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by nerv14 View Post
    If anyone believes that there is still an unpopped bubble in this economy, I would like to hear that. Only then would defecit spending in general be a bad idea during a recession. However, most people seem to agree that the economy is actually functioning worse then it should.
    Not so much "unpopped" as not yet fully deflated, but the housing market has definitely not bottomed out, and the mortgage manipulations being encouraged by Dear Leader and the rest of the Dumbocrats in Washington are only serving to prop up unrealistic housing values.

    Housing prices need to come back down to earth, and the debt instruments layered on top of those housing prices need to be fully digested and eliminated from bank balance sheets. Until that happens, healthy banking and real estate are impossible outcomes to attain. Thus far, nothing Dear Leader has advanced moves in even approximately the direction of that goal.

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    Educator nerv14's Avatar
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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by celticlord View Post
    Not so much "unpopped" as not yet fully deflated, but the housing market has definitely not bottomed out, and the mortgage manipulations being encouraged by Dear Leader and the rest of the Dumbocrats in Washington are only serving to prop up unrealistic housing values.

    Housing prices need to come back down to earth, and the debt instruments layered on top of those housing prices need to be fully digested and eliminated from bank balance sheets. Until that happens, healthy banking and real estate are impossible outcomes to attain. Thus far, nothing Dear Leader has advanced moves in even approximately the direction of that goal.
    The housing market not bottoming out is very different from it still being a bubble.

    I think that the decreases in housing prices have to do with consumer pessimism instead of the market correcting itself anymore. If consumer confidence and other mechanisms help the economy then I think we will be alright.

    I am not sure how we can argue what the real price of real estate is though.

    Also, even if real estate prices were still deflated, other parts of the economy certainly have lower then real values. Government spending or tax cuts could help those industries.


    I guess if the market encounters another big problem then you are most likely right, and if the economy continues on its path then im probally right :P

    But do you agree with the theory that when the economy is functioning less then its "potential" then defecit spending or tax cuts is helpful?

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    Re: Obama Releases $3.4 Trillion Budget Plan

    Quote Originally Posted by nerv14 View Post
    But do you agree with the theory that when the economy is functioning less then its "potential" then defecit spending or tax cuts is helpful?
    Tax cuts can be generally stimulative. Deficit spending has no lasting stimulative effect. Government spending merely takes dollars out of the private sector, and draws investment away from the private sector. When that government spending evaporates, so does the putative "stimulus", leaving the economy right back where it started. (See the mini-depression of 1937 for a glaring example of this)

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