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What makes people think cuts in government spending boost the economy?

pdog said:
I understand the fear. What I don't understand is the actual mechanism that would cause such a thing to occur. I can think of no instance where "confidence" is the driving factor for currency value.
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It isn't. It is the loss of confidence in the value of currency that hurts. We have money that holds value because people believe it is valuable. Nothing backs up the dollar other than that belief because it actually has no intrinsic value. If the belief disappears then the money no longer has value or at best has less value. If the money loses value fast enough you have serious inflation and serious inflation has destroyed many an economy. Just look at Brazil half a century ago or look at prewar Germany.
 
David_N said:
"Great state of Texas." There's a thread about Texas you should dig up..
Jesus, we have a massive amount of excess capital, and businesses are hoarding dollars. A decrease in taxes isn't going to magically spark investment.
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There is one or two threads on Texas. How many more threads on fiscal stimulus are you going poison this forum with ? 10 more ? 20 more ?

I use Texas as a OBVIOUS example of how SSE works. You post deficit spending threads ad nauseum, to the point where its trolling.

And yea, Bussinessses ARE hoarding dolllars. WHY !!???

No, its not because their " greedy " or " evil ", theyre responding to foolish Progessives policies that do the opposite of incentivizing private investment in our economy.

Theyre spending in States like Texas and people from all over America are coming here because of it
 
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humbolt said:
All very true regarding the OP. I'm still wondering exactly what "people" the OP might be referring to. I don't know of a soul who believes what is described.
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You're telling me there aren't people who believe cuts in government spending help the economy? Jesus..
 
Fenton said:
There is one or two threads on Texas. How many more threads on fiscal stimulus are you going poison this forum with ? 10 more ? 20 more ?

I use Texas as a OBVIOUS example of how SSE works. You post deficit spending threads ad nauseum, to the point where its trolling.

And yea, Bussinessses ARE hoarding dolllars. WHY !!???

No, its not because their " greedy " or " evil ", theyre responding to foolish Progessives policies that do the opposite of incentivizing private investment in our economy.

Theyre spending in States like Texas and people from all over America are coming here because of it
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Texas is a state that is not doing to well and is far behind on many measures. Dude, businesses are hoarding capital because there's not enough demand. Tax cuts for businesses aren't going to fix the problem. It's simply a fact. And if your only evidence is one state attracting some businesses from other states.. I laugh. The federal government is a different animal.
 
David_N said:
You're telling me there aren't people who believe cuts in government spending help the economy? Jesus..
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I didn't say that. I said I don't know of any. Why, there are people posting here who believe that LSD offers a religious experience. You can find some people who believe just about anything. You can't find people with any economic sense that believe what you've offered though. There certainly are people who believe government spending is out of control, but that is only a single part of a much larger problem. Jesus, indeed.
 
fmw said:
It isn't. It is the loss of confidence in the value of currency that hurts. We have money that holds value because people believe it is valuable. Nothing backs up the dollar other than that belief because it actually has no intrinsic value. If the belief disappears then the money no longer has value or at best has less value. If the money loses value fast enough you have serious inflation and serious inflation has destroyed many an economy. Just look at Brazil half a century ago or look at prewar Germany.
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But why would that belief disappear?
 
pdog said:
Can you explain what getting "our financial house in order" entails and how it will benefit our economy?
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A big share of our spending is directly related to payments on the national debt and that continually grows larger every year. By not having to make all of these huge payments on our national debt, this same money could be spent growing the economy and not having any debt. If we were 100% fiscally responsible from day one we would have zero debt, zero payments on the debt, and all of that money that we are currently spending on the national debt could be used for better purposes, which would grow the economy. Of course your response to that would be, "who cares, because deficits grow the economy anyway and we can just keep on printing money and the national debt isn't real debt so why do we even have to worry about it?". Well, all of this leads to inflation (at some point), higher interest rates, and a devalued dollar, which hurts the economy. By not having the debt, inflation and higher interest rates are less of a problem and we have a very strong dollar, all of which help the economy. One way we have zero or little debt with little inflation, lower interest rates and a strong dollar, the other way we have mega debt, hyperinflation at some point with higher interest rates, and a weak dollar. All of you MMT'rs only care about not having any inflation today and you could care less what happens tomorrow.
 
David_N said:
You're telling me there aren't people who believe cuts in government spending help the economy? Jesus..
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Phrased that way-I doubt it .

What most conservatives believe ( and it's just common sense) is that public sector spending robs from the private sector. Now, you could rightly argue that the US Gov't is doing it, we aren 't doing that-we' bloating the public sector NOW and creating a future det from the private sector. Very bad economics if taken to the extreme,which we are doing.

Conservatives believe that the private sector knows better than the central planners how to allocate and make capital productive.
 
David_N said:
You're telling me there aren't people who believe cuts in government spending help the economy? Jesus..
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Who says that? It's common that the right believes that cutting taxes helps the economy but I have never heard anyone say that cutting spending helps the economy. That doesn't mean that we shouldn't cut spending though. Less payments on the debt would help the economy so maybe that's what they and you are talking about.
 
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Moderate Right said:
A big share of our spending is directly related to payments on the national debt and that continually grows larger every year. By not having to make all of these huge payments on our national debt, this same money could be spent growing the economy and not having any debt. If we were 100% fiscally responsible from day one we would have zero debt, zero payments on the debt, and all of that money that we are currently spending on the national debt could be used for better purposes, which would grow the economy. Of course your response to that would be, "who cares, because deficits grow the economy anyway and we can just keep on printing money and the national debt isn't real debt so why do we even have to worry about it?". Well, all of this leads to inflation (at some point), higher interest rates, and a devalued dollar, which hurts the economy. By not having the debt, inflation and higher interest rates are less of a problem and we have a very strong dollar, all of which help the economy. One way we have zero or little debt with little inflation, lower interest rates and a strong dollar, the other way we have mega debt, hyperinflation at some point with higher interest rates, and a weak dollar. All of you MMT'rs only care about not having any inflation today and you could care less what happens tomorrow.
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Most Americans have a mortgage, many businesses have a loan in order to expand and they do that constantly as they expand? Why is this ok for everybody but the government?

Why is inflation a certainty (eventually) to you? What is going to happen from today where inflation isn't a problem to some period tomorrow where you think it will be a huge problem?
 
Moderate Right said:
Who says that?
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If you are naive enough to believe such descriptions as those offered, it's anybody who doesn't embrace Keynesian economics. That would be an awful lot of people. This is like fishing to catch a big fish with a number 10 hook. It's not serious.
 
KLATTU said:
Phrased that way-I doubt it .

What most conservatives believe ( and it's just common sense) is that public sector spending robs from the private sector. Now, you could rightly argue that the US Gov't is doing it, we aren 't doing that-we' bloating the public sector NOW and creating a future det from the private sector. Very bad economics if taken to the extreme,which we are doing.

Conservatives believe that the private sector knows better than the central planners how to allocate and make capital productive.
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How exactly does public sector DEFICIT spending rob from the private sector?
 
humbolt said:
If you are naive enough to believe such descriptions as those offered, it's anybody who doesn't embrace Keynesian economics. That would be an awful lot of people. This is like fishing to catch a big fish with a number 10 hook. It's not serious.
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The first thing that always crosses my mind when I think of Keynes is how he didn't know who did what in economic history. He proved this without a shadow of a doubt in the first chapter of his most famous book. A first chapter that was in fact only a paragraph long. It was however entertaining reading him mix everyone up.
 
pdog said:
How exactly does public sector DEFICIT spending rob from the private sector?
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I explained.that It creates a future debt ( plus interest) .
 
Fenton said:
Spain already has entire ghost towns with infrustructure and a few airports that were built during the height of Spains property bubble.

All empty, never used.

Its a example of the Keynesian " build it and they will come '' mentallity run amok.

Spain's Ciudad Real airport sold at auction for €10,000 - BBC News
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Actually it is the result of investors "irrational exuberance". They needed to put their money somewhere because there is just so much of it. Excess investment capital and low low interest rates is a dangerous thing and leads to risky ventures and bubbles.
 
humbolt said:
I didn't say that. I said I don't know of any. Why, there are people posting here who believe that LSD offers a religious experience. You can find some people who believe just about anything. You can't find people with any economic sense that believe what you've offered though. There certainly are people who believe government spending is out of control, but that is only a single part of a much larger problem. Jesus, indeed.
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Listen to libertarians, people who argue that deficits always crowd out the private sector. Government spending helps the economy, and cutting it when there is plenty of unused resources harms the economy. Spending isn't out of control, it's far to low in regards to the trade deficit and the desire of the private sector to net save.
 
David_N said:
Texas is a state that is not doing to well and is far behind on many measures. Dude, businesses are hoarding capital because there's not enough demand. Tax cuts for businesses aren't going to fix the problem. It's simply a fact. And if your only evidence is one state attracting some businesses from other states.. I laugh. The federal government is a different animal.
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Oh please....

California students test at bottom of the Nation in reading and Math
California students score at bottom of nation in reading, math - San Jose Mercury News


California has Nations highest Child poverty rates
California Has Highest Child Poverty Rate In Nation | KPBS

Now how many more threads are you going to create that say the same thing ?
 
KLATTU said:
Phrased that way-I doubt it .

What most conservatives believe ( and it's just common sense) is that public sector spending robs from the private sector. Now, you could rightly argue that the US Gov't is doing it, we aren 't doing that-we' bloating the public sector NOW and creating a future det from the private sector. Very bad economics if taken to the extreme,which we are doing.

Conservatives believe that the private sector knows better than the central planners how to allocate and make capital productive.
Click to expand...

The private sector isn't interested in full employment, it's all about efficiency, and if that means millions unemployed, the private sector doesn't care. Claiming the public sector robs from the private sector is a silly claim when there is plenty of excess capital and profits are through the roof. Future debt for the private sector..? Deficit spending helps the private sector take on less debt.
 
Fenton said:
Oh please....

California students test at bottom of the Nation in reading and Math
California students score at bottom of nation in reading, math - San Jose Mercury News


California has Nations highest Child poverty rates
California Has Highest Child Poverty Rate In Nation | KPBS

Now how many more threads are you going to create that say the same thing ?
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I don't care about California. We're not debating Texas and California Fenton. We're talking about the effects of such a policy on the national level. And if you want to talk about states, look at Kansas, louisaniana.. Oh, did I mention Texas isn't even doing that great?
 
iguanaman said:
Actually it is the result of investors "irrational exuberance". They needed to put their money somewhere because there is just so much of it. Excess investment capital and low low interest rates is a dangerous thing and leads to risky ventures and bubbles.
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Lol !!
 
humbolt said:
If you are naive enough to believe such descriptions as those offered, it's anybody who doesn't embrace Keynesian economics. That would be an awful lot of people. This is like fishing to catch a big fish with a number 10 hook. It's not serious.
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Virtually every politicians turns to Keynes when a recession hits ;)
 
KLATTU said:
I explained.that It creates a future debt ( plus interest) .
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But that is only a percentage. Debt service on the debt would have to exceed deficit spending for that to be true. In other words, if debt service is 200 billion, and deficit spending is 600 billion, there is actually a $400 billion dollar GAIN to the private sector.
 
David_N said:
Listen to libertarians, people who argue that deficits always crowd out the private sector. Government spending helps the economy, and cutting it when there is plenty of unused resources harms the economy. Spending isn't out of control, it's far to low in regards to the trade deficit and the desire of the private sector to net save.
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If government spending at the levels we are seeing helps the economy, then we wouldn't be teetering on the brink of recession after so many years of high government spending - nearly 16 years now.
 
David_N said:
Virtually every politicians turns to Keynes when a recession hits ;)
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If the economy requires this level of priming, we should repair the pump rather than run the reservoirs dry.
 
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