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Thread: The recession may be over at last — so what now? [edited]

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by j-mac View Post
    What happens to this model if supply is not static.
    I made all of my assumptions crystal clear from the start. His reply was to my statement about the long run.

    IOW, what happens if we were to explore, and flood the market with our own supply
    I did explain.
    Quote Originally Posted by Goldenboy219 View Post
    It is also very important to note that supply shocks do exist (war, major discovery of commodity, etc...) but are heavily reliant on future expectations to altar market sentiment.
    In the long run, it will simply be one of many shifts in supply. Remember, the total total amount of supply (scarcity) is not infinite.

    In the short and intermediate run: Assuming a massive supply shock, the initial reaction would most likely be a shift in supply, again to the right, thereby lowering both price... and quantity demanded at the former equilibrium price.
    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: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by j-mac View Post
    What happens to this model if supply is not static. IOW, what happens if we were to explore, and flood the market with our own supply?


    j-mac
    J-mac,

    The issue is long-run aggregate supply. Long-run aggregate supply is assumed to be natural or full-employment output. That output depends on factors such as the supply of labor, capital, technology and natural resources. The long-run aggregate supply curve shifts to the left or right only if those factors have changed, but it must remain vertical by definition.

    For example, let's say a nation can produce 100 items at full employment given its population, capital, technology, and natural resources. Regardless of changes in aggregate demand, the nation's output cannot exceed 100 items, even if its people would like 200. Hence, in the long-run, shifts in aggregate demand only affect the price level.

    In the short-run, the supply curve is rarely vertical. Hence, when aggregate demand shifts to the left or right, the shift in aggregate demand impacts both prices and output.
    Last edited by donsutherland1; 10-30-09 at 05:47 PM.

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    Re: The recession may be over at last — so what now? [edited]

    First off, this is what occurs when people who are poorly equipped to debate economics use data and misinterpret what it is they are reading.

    Now let’s put this in perspective with a reminder of what I stated:

    Originally Posted by Truth Detector
    This is patently wrong; it is DEMAND that determines real output NOT supply. I am not sure which university you attended that taught such upside down economics; where did you attend college again?

    SUPPLY has never driven an economy; it is always demand and consumers spending their hard earned wealth will determine what products and services will be produced. Supply can only attempt to keep up with demand and balance their inventories with that demand.


    The graphs you used do not describe the economy or supply and demand, but are actually charts that describe the effects on price based on supply and demand.

    Your farcical assumptions about “supply” argue that if one merely increases the supply, then demand will naturally follow; this is not the case.

    Demand is what drives the supply curve; the lack of demand/supply will determine the price.

    The notion that the Government can BORROW and PRINT money to drive consumer demand is about as farcical as Michael Moore's opinions about how great the Cuban Healthcare system is.

    But alas, here we have quasi uneducated amateur and self proclaimed economist falling for one of the biggest lies to date by this administration; that the Government can improve the economy if it only spends a LOT of money it doesn’t have.

    Quote Originally Posted by Goldenboy219 View Post
    Since your post is nothing short of opinionated drivel, no matter how effectively i dispute your opinions, you are still going say i am wrong (because reality is colliding with your ideology).
    I find this commentary ironic based on the uninformed efforts you have made so far.

    Quote Originally Posted by Goldenboy219 View Post
    Aggregate Supply... in the long run... has a slope that is undefined, hence the AD curve is vertical. This is not Keynesian economics, instead this is classical stance, of which is the basis of supply side economics. Hence, in the long run, supply (and not demand) determines output.

    I know you fancy yourself an economic genius, but the charts you are showing are merely descriptions about how supply and demand can affect prices.

    Quote Originally Posted by Goldenboy219 View Post
    Hopefully you understand the demand curve is downward sloping. No matter where the demand curve intersects a vertical line (AS), it will still lead to a constant amount of output (y) in regards to long run aggregate supply. Go ahead and try it for yourself. Make up any type of demand curve to intersect long run supply, and tell me what happens to the output When you are done, you can either PM me and tell me you are sorry for your mistake, or continue to make yourself look foolish by attempting to dispute simple mathematics. The choice is yours.

    Ill even help you out.

    It is obvious from your condescending comments and arrogant assumptions that the irony of your remarks escapes you; you’re using a chart that merely describes how supply and demand affects price; once more give me a great big DUH.

    If we used your nonsensical arguments, all we need to do is produce MORE and demand will occur! But of course we know that demand is not driven by supply, but that supply is driven by demand; and that is what is currently missing in this recession and no amount of Government borrowing and printing of money will change that simple FACT.

    Quote Originally Posted by Goldenboy219 View Post
    Now move the demand curve anywhere on the graph and explain to me in your logic how output is changed (in regards to long run AS).

    You might want to further dislodge your foot from your mouth, as demand (in the long run) is what determines price, not output.
    I am laughing at your weak efforts to pretend you actually know the first thing about economics; but you are using a price model to argue how the economy expands.

    Like I said, supply does not drive the economy, demand does. And right now, there is little demand and correspondingly, supply will have no effect, as always, on the improving the economy.

    Again, the farcical notions you put forth is that one can increase demand for goods and services by simply putting more goods and services into the economy; you’re kidding me right?

    Quote Originally Posted by Goldenboy219 View Post
    I can care less about your opinions, as they are based on phantom foundations.
    This is priceless coming from someone who thinks a price demand curve is an acurate description of how the economy works.

    I gave you a link to someone who knows far more than you or I; and all I get in response is this nonsense; you truly have been a vast waste of effort here.

    Your efforts to comprehend supply side economics truly fails in that the supply side theory along with the Laffer curve involves the reduction of marginal tax rates to spur capital investment.

    Bottom line; until people have a reason to spend (demand) thus creating a reason to invest in businesses (supply) all the Government spending in the world will not move either curve much. The market is looking at the deficit and the National Debt knowing that at some point in time, someone will have to pay for all this spending the Government is doing with zero tangible effects; they also know it will be ALL of us who will have to pay which will reduce the disposable income available to individuals which will further reduce spending (demand) and thus have a large impact on investment and formation of businesses (supply) which create jobs.

    Where did you get your degree again? I missed your response to my continued questions; perhaps you are avoiding my questions because of the OBVIOUS answer.

    Carry on.

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by donsutherland1 View Post
    J-mac,

    The issue is long-run aggregate supply. Long-run aggregate supply is assumed to be natural or full-employment output. That output depends on factors such as the supply of labor, capital, technology and natural resources. The long-run aggregate supply curve shifts to the left or right only if those factors have changed, but it must remain vertical by definition.

    For example, let's say a nation can produce 100 items at full employment given its population, capital, technology, and natural resources. Regardless of changes in aggregate demand, the nation's output cannot exceed 100 items, even if its people would like 200. Hence, in the long-run, shifts in aggregate demand only affect the price level.

    In the short-run, the supply curve is rarely vertical. Hence, when aggregate demand shifts to the left or right, the shift in aggregate demand impacts both prices and output.
    So according to this logic, all we need to do is produce more! How simple is that???



    The second fallacy to the above argument is the assumption that an economy can only produce so much; in other words, the economic output pie is finite. But we all know this is also false; the economic pie is infinite and therefore there are no limits on the economic output capability of a society.

    Yes there can be limited resources for specific products and this will increase prices which correspondingly affect demand, but the economic output of any nation is unlimited.

    That is the difference between Liberal beliefs versus Conservatives. Liberals believe that the economic pie is finite; therefore, if someone gets MORE of the pie, someone else must correspondingly be getting less. This is of course false.

    The economic pie is infinite and technology/inventions can actually expand that pie infinitely. Microsoft and Apple are the best and biggest examples of this.

    Of course if Liberals have their way with environmental mumbo-jumbo, yes the economic output can be limited and correspondingly less jobs will be created; which is what we are seeing with an Obama administration.

    As this administration strangles productive industries and incentivizes suspect technologies, you will see a large reduction in output, jobs and tax revenues.

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by TOJ View Post
    Great because now when it goes back down, Prez Doofus will get all the credit.

    .
    Why would GWB get the credit? He's the one that got us into this mess.
    <font size=5><b>Its been several weeks since the Vegas shooting.  Its it still "Too Early" or can we start having the conversation about finally doing something about these mass shootings???​</b></font>

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by disneydude View Post
    Why would GWB get the credit? He's the one that got us into this mess.
    I can’t help but laugh every time I see a Librul claim Bush got us into this mess. Being Librul is so easy; you just have to say things are so and care.


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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Truth Detector View Post
    I can’t help but laugh every time I see a Librul claim Bush got us into this mess. Being Librul is so easy; you just have to say things are so and care.

    Even more funny is the denial coming from the last remaining Bush apologists out there.
    <font size=5><b>Its been several weeks since the Vegas shooting.  Its it still "Too Early" or can we start having the conversation about finally doing something about these mass shootings???​</b></font>

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Truth Detector View Post
    I can’t help but laugh every time I see a Librul claim Bush got us into this mess. Being Librul is so easy; you just have to say things are so and care.

    What is a "Librul"?

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by winston53660 View Post
    What is a "Librul"?
    a poor attempt by the uneducated to spell.
    <font size=5><b>Its been several weeks since the Vegas shooting.  Its it still "Too Early" or can we start having the conversation about finally doing something about these mass shootings???​</b></font>

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    Re: The recession may be over at last — so what now? [edited]

    Quote Originally Posted by Truth Detector View Post
    So according to this logic, all we need to do is produce more! How simple is that???
    The point was that in the long-run, output depends strictly on a society's aggregate supply, not aggregate demand.

    In the short-run--and that's what we're dealing with in the recession--shifts in both the aggregate supply and aggregate demand curves impact both prices and output. Hence, increased government spending can, ceteris paribus, increase aggregate demand and, assuming an upward-sloping supply curve, lead to an increase in output (and jobs). That's a short-run remedy for dealing with a shock that reduces aggregate demand. Not surprisingly, annualized real GDP growth for Q3 was 3.5%. Excluding various government efforts ("cash for clunkers," home-buyers' tax credit, other stimulus spending), growth would have been in the 1.5%-2.0% range according to many of the estimates I have seen. At slower growth, more jobs would have been lost than was otherwise the case.

    Of course if Liberals have their way with environmental mumbo-jumbo, yes the economic output can be limited and correspondingly less jobs will be created; which is what we are seeing with an Obama administration.

    As this administration strangles productive industries and incentivizes suspect technologies, you will see a large reduction in output, jobs and tax revenues.
    Taking measures that might, let's say, reduce the de facto availability of natural resources (e.g., energy) would push aggregate supply to the left (reduce it). In other words, if natural resources useful for the production of energy are reduced via law and that law is enforced, adoption of such a policy would have the same effect as if the natural resources did not exist. Hence, the policy would push the aggregate supply curve to the left. That is not inconsistent with the point concerning what does and does not affect long-run aggregate supply.

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