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Canada has gone... Keynesian?

Kushinator

Kushinator

I'm not-low all the time
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With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!


Here are some details of the economic plan provided by CDCNews.


  • Deficit: $29.4 billion this year, $29 billion the next before falling - but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth - much lower than economists predict.
  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures: up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.
  • Tax credits: Children's arts and fitness tax credits phased out by end of 2017. But teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 billion of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to "modernize and revitalize CBC/Radio-Canada in the digital era."
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

Thoughts? Predictions?
 
Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!

Thoughts? Predictions?
Click to expand...

They can use short term deficits to boost the economy.

It will work if they don't keep running deficits perpetually.

They will have to pay it back.

Just like you with your credit cards; you borrow when you need to and then pay it back when the cash flow is there.
 
Exquisitor said:
Just like you with your credit cards; you borrow when you need to and then pay it back when the cash flow is there.
Click to expand...

A sovereign economy is in no way the same as a household. Your analogy fails in this respect.
 
Kushinator said:
A sovereign economy is in no way the same as a household. Your analogy fails in this respect.
Click to expand...

I admit it's a weak line but the idea of ebb and flow is the same.

Sometimes money is short and you have to borrow and other times there is surplus money.

Every school kid learns this.

People think, "I will always be rich." "I always go for the money." "I am rich in this life and in my next life I will be rich too." "I will just pick up where I left off." While it is natural to do this, there are other mitigating circumstances and the principle of rotation so people who act exclusively on this thinking are very unwise. It is better to create a world where any birth is good, where there are opportunities for all so you will have somewhere to go when for example you weary of the responsibility of great wealth and the mistakes you may have made with it.

One should think, "After so many poor births I will again be rich."

Why do you think some are so forlorn to leave this body with which they have accumulated so much wealth?
 
Van Basten said:
What kind of household would let itself sink into so much debt?!
Click to expand...

The kind of household that watches it's income increase more than the additional debt.
 
Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!


Here are some details of the economic plan provided by CDCNews.


  • Deficit: $29.4 billion this year, $29 billion the next before falling - but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth - much lower than economists predict.
  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures: up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.
  • Tax credits: Children's arts and fitness tax credits phased out by end of 2017. But teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 billion of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to "modernize and revitalize CBC/Radio-Canada in the digital era."
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

Thoughts? Predictions?
Click to expand...

I predict the economy will completely collapse and The private sector will lose out on resources, leading to the death of free market capitalism. (Kidding, I predict economic growth to take place and I can't see any largely negative consequences coming from this.)
 
Van Basten said:
What kind of household would let itself sink into so much debt?!
Click to expand...
Haven't you heard? Decades of economic theory based on Debt being a negative is no longer the case, Debt is now GREAT! It doesn't matter! In fact, tomorrow any government anywhere could give every citizen 1,000,000 dollars printed as government debt and it wouldn't hurt anything. They just don't because that would make being a millionaire less meaningful and the rich like being important.
 
Renae said:
Haven't you heard? Decades of economic theory based on Debt being a negative is no longer the case, Debt is now GREAT! It doesn't matter! In fact, tomorrow any government anywhere could give every citizen 1,000,000 dollars printed as government debt and it wouldn't hurt anything. They just don't because that would make being a millionaire less meaningful and the rich like being important.
Click to expand...
Zzzzzzzzzzz.......
Decades of economic theory applying gold standard concepts and comparing the government to a household.. No one has said government debt is great, it's not something to fear though, especially for a country sovereign in its own currency with no foreign debts or a pegged currency, and plenty of potential Gdp growth/plenty of exports. "Any government anywhere" Nonsense. What makes you think the ECB will let nations under it do this? Hell, why would anyone want to do this? If you want demand to exceed supply and want to harm the economy, be my guest. Your strawman is silly.
 
Upon reading where the spending is going to go, I can't see how anyone can disagree with this.
 
Kushinator said:
The kind of household that watches it's income increase more than the additional debt.
Click to expand...

David_N said:
A government sovereign in its own currency doesn't need to worry about "debt" denominated in its own currency.
Click to expand...

I was joking.

Bad attempt at internet sarcasm #2838493.
 
David_N said:
Upon reading where the spending is going to go, I can't see how anyone can disagree with this.
Click to expand...

Multiple historic and rather glaring examples of the failures of Keynesian strategies NOT growing economies and you cant see how someone can disagree with this ?

One of the many problems with " stimulus " is the Keynesian view of the average comsumer. They think pouring debt into a economy will kick start spending and increase demand because as far as theyre concerned consumers are unsophisticated spending machines.

Truth is consumers are considerate and thoughtful when it comes to their spending and that's why stimulus only stimulates debt as the economy remains stagnant.

Stimulus means the Govt isn't addressing the REAL reasons why the economy is stagnant and that means when Stimulus runs out you're still left with economic stagnation, and now a big pile of debt.

So no, I cant see why anyone would think that this was a good idea
 
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Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!


Here are some details of the economic plan provided by CDCNews.


  • Deficit: $29.4 billion this year, $29 billion the next before falling - but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth - much lower than economists predict.
  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures: up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.
  • Tax credits: Children's arts and fitness tax credits phased out by end of 2017. But teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 billion of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to "modernize and revitalize CBC/Radio-Canada in the digital era."
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

Thoughts? Predictions?
Click to expand...

Buy Canadian bank stocks. I don't even think it matters which one.
 
Fenton said:
One of the many problems with " stimulus " is the Keynesian view of the average comsumer. They think pouring debt into a economy will kick start spending and increase demand because as far as theyre concerned consumers are unsophisticated spending machines.

Truth is consumers are considerate and thoughtful when it comes to their spending and that's why stimulus only stimulates debt as the economy remains stagnant.
Click to expand...
First of all, you have it wrong. They're not pouring debt into the economy, they're pouring cash into the economy, and debt into the government. Economy =/= Government.

The rest of your post isn't quite correct either. Stimulus being hampered by existing private sector debt is plausible and likely to some extent, but that's not 'stimulating' debt. 'Stimulating debt' is nonsense.
 
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David_N said:
A government sovereign in its own currency doesn't need to worry about "debt" denominated in its own currency.
Click to expand...

Well, that's the stated line except when you admit that too much debt and too much printing of money leads to inflation at some point and then the walls cave in and the roof falls down on top of you. By that time it's too late to take you to the hospital. The patient is dead.
 
David_N said:
A government sovereign in its own currency doesn't need to worry about "debt" denominated in its own currency.
Click to expand...

Zimbabwe_$100_trillion_2009_Obverse.jpg

You're wrong.
 
Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!

Thoughts? Predictions?
Click to expand...

I would not worry much about it.

Canada's Total Debt to GDP has been trending downward from 2012 to 2015. 88.1% down to 86.5%. While this change will trend it back upwards, it does not look to be all that bad in expectation. Similar story with Canada's deficit to GDP on a trend. Slightly upwards but they project enough GDP growth over 2016 to 2018 to make this not worthy of panic.

If all goes well for Canada and enough of that 120 billion ends up to Infrastructure quick enough then their economy should improve at or above expectation over the time frame.

All in all, aside from tax credit and Arts spending, this looks to be reasonable economic policy. Assuming of course nothing catastrophic happens to their economy during this period.
 
OrphanSlug said:
I would not worry much about it.

Canada's Total Debt to GDP has been trending downward from 2012 to 2015. 88.1% down to 86.5%. While this change will trend it back upwards, it does not look to be all that bad in expectation. Similar story with Canada's deficit to GDP on a trend. Slightly upwards but they project enough GDP growth over 2016 to 2018 to make this not worthy of panic.

If all goes well for Canada and enough of that 120 billion ends up to Infrastructure quick enough then their economy should improve at or above expectation over the time frame.

All in all, aside from tax credit and Arts spending, this looks to be reasonable economic policy. Assuming of course nothing catastrophic happens to their economy during this period.
Click to expand...

There's nothing reasonable about repeating economic strategies that have failed miserably time and time again.

There's nothing reasonable about perusing purley ideological initiatives under the pretense of competence.

Even Keynes said " When the facts change I change my mind ", but that doesn't apply to the average Progressive who thinks that temporary solutions ( papering over the underlying issues that are causing stagnation ) are the way to grow economies.
 
Fenton said:
There's nothing reasonable about repeating economic strategies that have failed miserably time and time again.

There's nothing reasonable about perusing purley ideological initiatives under the pretense of competence.

Even Keynes said " When the facts change I change my mind ", but that doesn't apply to the average Progressive who thinks that temporary solutions ( papering over the underlying issues that are causing stagnation ) are the way to grow economies.
Click to expand...

Do you have any evidence to back this up?

(BTW, that is not what Keynes said or meant.)
 
OrphanSlug said:
Do you have any evidence to back this up?

(BTW, that is not what Keynes said or meant.)
Click to expand...

http://www.cnbc.com/2014/08/21/japan-has-fallen-victim-to-the-keynsian-scamcommentary.html

I'm amazed I had to even post that link.

Japan stuck by the Keynesian play book to the letter throughout the 90's and even tried it again adding Monetary stimulus to suppress interest rates along with new fiscal stimulus.

Their economy remained stagnant in the 90's and even contracted under Abenomics.

Obama's stimulus even failed to live up to the standards Obama set for it when he was selling it as a way to grow the evonomy

We have people that literally think busineses DON'T respond to incentives supportimg fiscal stimulus also so I think its safe to assume Keynesians are not the most competent people when it comes to growing market economies.

Putting the cart before the horse, demand before production is a tell tale sign Progressives have no clue what they're talking about.
 
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Fenton said:
http://www.cnbc.com/2014/08/21/japan-has-fallen-victim-to-the-keynsian-scamcommentary.html

I'm amazed I had to even post that link.

Japan stuck by the Keynesian play book to the letter throughout the 90's and even tried it again adding Monetary stimulus to suppress interest rates along with new fiscal stimulus.

Their economy remained stagnant in the 90's and even contracted under Abenomics.

Obama's stimulus even failed to live up to the standards Obama set for it when he was selling it as a way to grow the evonomy

We have people that literally think busineses DON'T respond to incentives supportimg fiscal stimulus also so I think its safe to assume Keynesians are not the most competent people when it comes to growing market economies.

Putting the cart before the horse, demand before production is a tell tale sign Progressives have no clue what they're talking about.
Click to expand...

That is commentary, I asked for evidence.
 
Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!


Here are some details of the economic plan provided by CDCNews.


  • Deficit: $29.4 billion this year, $29 billion the next before falling - but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth - much lower than economists predict.
  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures: up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.
  • Tax credits: Children's arts and fitness tax credits phased out by end of 2017. But teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 billion of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to "modernize and revitalize CBC/Radio-Canada in the digital era."
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

Thoughts? Predictions?
Click to expand...

Hard to say, what this will bring about. Keynesian policies work very well, where circumstances allow. Whether the conditions are such that this program can work is impossible to say without looking at the thing in some detail.
But the debt to gdp ratio is much higher, if I recall correctly. That would, if true, throw in doubt the prognosis.
 
OrphanSlug said:
That is commentary, I asked for evidence.
Click to expand...

I posted evidence, it was in the link

How much Stimulus did Japan blow through in the 1990's ?

They spent 100 trillion yen via 10 seperate Stimulus initiatives and invested heavily on infrastructure.

Their economy remained stagnant while their debt shot up exponentially.

Under Abenomics they had four more Stimulus packages and their economy actually contracted.

Obama's stimulus failed to meet his OWN standards and we've spent Trillions more since 2009 and our economy is still on life support.

How is any of that not evidence ??
 
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