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Keynesian stimlulus spending in recessions: does it really work?

Fishking said:
Really? I remember buying a candy bar for .25 cents when I was a kid and now the same one is .99 cents or more. It always comes out of the private sector, whether it's through inflation or taxation.
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And how much did people earn back when candy bars were $0.25? Probably >4x what they earn now for the same job.

In order to prove your point, you would have to demonstrate a correlation between debt/deficit spending and inflation, which you have not done. Inflation happens for a lot of reasons, and the price of some things has even come down - how can you possibly relate price fluctuations to deficit spending?

Fishking said:
Errr...huh? No it hasn't. That's quite silly to even say.
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What, Reinhart and Rogoff's infamous paper? Outside of the conservative echo chamber, it's complete garbage.

More thoughtful economic minds have taken the same data and found that high debt-to-GDP ratios follow slow growth, and not the other way around. Slower growth => lower tax receipts => larger deficits => larger debt-to-GDP ratios.
 
Fenton said:
Remember ?? That was a lie. The Texas economy isn't dependent on a single volatile commodity and that means we continue to grow, to add jobs despite the Oil crash
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No, it wasn't a lie...and if you bothered to read the link I very helpfully gave you, you'd see that. But you don't read links when they are given to you because you have a narrative that you feel compelled to push no matter how antiquated it may be. That link was from the Wall Street Journal, so you can't screech about the gosh darned librul media.
 
Fishking said:
Nope. Wages haven't increased on the same rate as inflation.
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Of course they have!

fredgraph.png


Our payment on only our interest rates have cost the same as the Iraq and Afghanistan wars combined, during the same time periods.
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Interest expense is income for debt holders. Going to war cost real dollars (that could have gone elsewhere) and lives.

That's significant.
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Nope!

This would only grow to be more problematic as the debt increased in proportion to our GDP.
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You haven't even begun to identify a problem, other than assume debt is bad.

Further, it's not even inherently viable, and that previous point still stands.
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Some said the same thing in 1945, when debt-to-gdp was above 100%, at $260 billion.

The only reason we are floating is because we have forced adherence the petro-dollar and international trade currency. We lose out on either of those and our house of cards comes tumbling down.
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We don't force anyone to use anything. Given that the U.S. consumes more foreign goods and services than any other currency, our trade partners hold dollars, which can be used to consume U.S. goods and services. Furthermore, U.S. dollars are relatively stable, as are the investments that are denominated in them.
 
Fishking said:
Sorry, no. I don't need any paper to tell me it's economically detrimental to have a poor debt to GDP ratio.
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And this is the problem with debating with conservatives. You take a stand, based on zero real-world evidence, and you refuse to accept any data or proof that proves you incorrect.

How did you come to the conclusion that a high debt-to-GDP ratio was detrimental in the first place? Let's get to the root of your problem...
 
Fishking said:
Sorry, no. I don't need any paper to tell me it's economically detrimental to have a poor debt to GDP ratio.
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Maybe you should need some paper because the facts show it's not. That's why R/R had to fake their data, and why they didn't have their report peer reviewed. Because they knew it was BS. They were trying to justify a pre-determined conclusion in order to support an agenda of austerity with the goal of undermining public institutions so they can be sold off to private interests. Like all Conservative policy.

I refuse to accept that they made "spreadsheet errors" and unintentionally left out key data points that undermined their conclusion.

Typical dishonest, sloppy work by Conservatism. Nothing new.
 
ataraxia said:
Is this really true?
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Of course its true. But as you'll learn with conservatives here, they're able to dispute indisputable facts so ignoring logic and anecdotal stories is a cake walk for them. Have you noticed your integrity has already been questioned for posting your story? Conservatives simply post things as fact simply because they wish it was true. Lets look at a typical conservative post to see how easily they ignore reality..

Lutherf said:
GM died. Its bond holders were forced to exchange the debt they owned for equity in the new entity. The "loans" provided to GM by the FedGov were only partially paid back (roughly $12 Billion short). The new GM (without all the excess baggage of GMAC and a few less than profitable divisions) is marginally profitable but it's not exactly setting the world on fire.
The bailout also set a precedent as a "too big to fail" entity. That isn't productive and could well lead to even worse decisions in the future. It's just my opinion, but if the FedGov really wanted to help they'd have allowed GM to crash and then offered some form of loan guarantees to other organizations that came in and cannibalized what was left. Doing so would have afforded the opportunity for a MUCH more diverse and agile auto industry in this nation. We may well have seen a resurgence in the industry akin to what we had in the 40's and 50's.
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See how he obediently posts the conservative narratives his conservative masters told him believe. He simply doesn’t understand that if GM were to crash, the bonds would have been worthless. Look how he thinks the auto bailout “set a precedent”. It’s remotely possible he doesn’t remember the Chrysler bailout from the 80s but there is simply no way a sentient belng can not know about AIG, GSE and bank bailouts and then whine about the auto bailout. But yet he did. Remembering those “precedents” hurts his narrative. So as you’ll soon learn and learn repeatedly, when it comes time for a conservative to choose integrity or narrative, they always choose narrative.

Also, he’s unaware that the govt did offer to back stop DIP financing for GM. Since it didn’t help their agenda, his conservative masters didn’t tell him that. Even with the govt backing, they couldn’t find anybody willing and able to help. And of course, he thinks the GM and C factories would have magically reopened when someone bought them in bankruptcy because that's what he was told to believe. Lets see if he can be honest and answer a simple question (my experience is he cant and wont)

Luther, lets pretend GM was allowed to fail and other car companies bought the factories and magically re-opened them, what would bondholders have received for their bonds?
 
Casper said:
And while I partly agree I am not sure allowing GM to completely fail would have been such a good idea either, many smaller companies would also be forced out of business in the process and in todays world most would not be replaced, loosing more manufacturing jobs might not exactly be a good thing. That said there are some banking and lending institutions I feel should have been allowed to fail, they after all were a major part of why we ended up where we were.
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I disagree completely.


We just wouldn't be driving chevis, and those supporting companies would be selling ford, Chrysler, Toyota, Honda, etc, more parts.
 
KevinKohler said:
I disagree completely.

We just wouldn't be driving chevis, and those supporting companies would be selling ford, Chrysler, Toyota, Honda, etc, more parts.
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Those parts suppliers wouldn't have been able to stay afloat if their sales to GM went away. Not to mention the $5 billion they received from the bailout.
 
Kushinator said:
Those parts suppliers wouldn't have been able to stay afloat if their sales to GM went away. Not to mention the $5 billion they received from the bailout.
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Prove it.

Where is your link to unbiased, factual proof that ALL of those parts suppliers would have ALL gone under were it not for the bailouts? And if you can (which you cannot, btw), then also prove to us all how other parts suppliers could not have sprung up in their place and employed just as many Americans?

And not some link to some article that claims it is true - that means nothing.

Actual documented proof that what you are claiming is so.

And save your opinions...they mean little to me on this. The ONLY thing I will read from you on this is a link that proves what you said was true.


BTW - we both know you do not have it.



You have NO IDEA how the business world works, do you?

If GM had gone under - are you really so clueless as to think that all those Americans who bought GM's would simply stop buying cars/trucks? Of course not. THey would just buy other vehicles. And other companies would take up the slack.
And if Ford wanted to increase production to fill the void..what would they do? Would they build brand new plants and train brand new workers? Or would they just buy the old GM plants for pennies on the dollar, re-tool them and use the existing workers? The answer is ridiculously obvious as the latter would cost a tiny fraction of the former.
ZERO jobs in the automotive industry would have been lost had GM gone under. Not some...ZERO.


Oh, and thanks to GM being bought by the government, many thousands of jobs WERE lost because the new GM refused to allow their Pontiac and Saturn divisions to be bought by Americans (the former by some Detroiter and the latter by Penske). So those divisions - with many thousands of jobs - were allowed to die.

Penske to buy Saturn; GM will make cars for brand for 2 years - ABC News

Also, Chrysler got bailout money...billions of it that they never have to pay back (and obviously never will). ANd what happened to them? They got bought up by Fiat. So now they are Italian owned.
So way to go bailout lovers.You bailed out a company that is now Italian.


And finally, what people fail to realize is that well over $10 billion dollars were flat out gifts to GM and Chrysler. The loans were separate. As I said, that money will NEVER be gotten back.


Bankruptcies happen all the time.They do not destroy industries...they just mean lousy companies are replaced by stronger ones.



The auto bailouts were a disaster. They probably saved ZERO jobs. They cost the taxpayers billions and billions - much of which went to an eventual Italian company. And they resulted in the loss of Pontiac and Saturn and the thousands of people they employed.
 
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Incisor said:
Again, you are comparing apples to oranges. Greece's debt problems came from austerity, not spending. Greece had debt, then the ECB said they had to cut spending in order to get their bailout, under the promise that doing so would turn Greece around. Unfortunately, the exact opposite occurred. Greece is worse off now after austerity than it was before.
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WHAT ??? You have NO business positing in this section of the forum if all your'e going to do is perpetuate BS partisan talking points. Really, how ****ing hard is it to do just a little bit of research ? So you'll at least be informed ?? Apparently its a impossibility for you and others like you

First, Greece entered into the EU under false pretenses when it signed the Maastricht treaty in 2001 stating that it as a EU member in good standing met the minimum Debt to GDP standards required for admittance into the Union and then would comply with the deficit spending restrictions placed on all EU member states.

In 2004, the Euro-stat refused to validate the fiscal data transmitted by the Pasok Government and asked for a revision, this revision exposed the last 10 years of fiscal improprieties which changed the government balance from a surplus to a deficit.

After winning the General Election the Conservative New Democracy party led by Costas Karamanlis sent revised financial audit to the Euro-stat which concluded that the PASOK administration and prime minister Costas Simitis had falsified Greece's macroeconomic statistics prior to entering the EU and after becoming a member state

Greece entered into the Union under false pretenses and then exploited their member status to access billions of Euros in cheap credit while simultaneously loading up EU Banks with worthless Greek bonds . That money was spent to sustain a bloated and growing public sector and unsustainable public sector benefits and entitlements at the expense of wealth creation. It was a SCAM, and Greece simply ran out of other peoples money.

No, austerity didn't cause Greece's debt crisis, a corrupt Socialist State run by Leftist and populated with people who had been poisoned by years of entitlements caused their debt crisis. Austerity is simply the consequence of corruption and foolish spending by Socialist who apparently also think " debt doesn't matter ".

The idea that Greece could simply spend their way back to prosperity had they had access to their own sovereign currency is just a hack narrative pushed by people who have no idea what their talking about. Greece would have simply turned into another Venezuela but it would have been far worse.

Venezuela at least has access to vast resources, Greece ignored their private sector while spending other peoples money to bolster a unsustainable public sector and that means they had nothing in the way of exports to pay back their debt or to mitigate the consequence of trying to print and spend their way into prosperity
 
Vern said:
See how he obediently posts the conservative narratives his conservative masters told him believe. He simply doesn’t understand that if GM were to crash, the bonds would have been worthless. Look how he thinks the auto bailout “set a precedent”. It’s remotely possible he doesn’t remember the Chrysler bailout from the 80s but there is simply no way a sentient belng can not know about AIG, GSE and bank bailouts and then whine about the auto bailout. But yet he did. Remembering those “precedents” hurts his narrative. So as you’ll soon learn and learn repeatedly, when it comes time for a conservative to choose integrity or narrative, they always choose narrative.

Also, he’s unaware that the govt did offer to back stop DIP financing for GM. Since it didn’t help their agenda, his conservative masters didn’t tell him that. Even with the govt backing, they couldn’t find anybody willing and able to help. And of course, he thinks the GM and C factories would have magically reopened when someone bought them in bankruptcy because that's what he was told to believe. Lets see if he can be honest and answer a simple question (my experience is he cant and wont)

Luther, lets pretend GM was allowed to fail and other car companies bought the factories and magically re-opened them, what would bondholders have received for their bonds?
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One of the benefits to owning debt instead of equity is that you get paid back out of the proceeds from liquidation. The bond holders may not have been made completely whole but they would definitely not have been holding worthless paper.

In the 80's all that happened is that the government backed a couple of billion in loans to Chrysler. They didn't actually bail them out though the DoD did buy a ton of K cars that helped Chrysler pay off the loans.
 
DA60 said:
Prove it.

Where is your link to unbiased, factual proof that ALL of those parts suppliers would have ALL gone under were it not for the bailouts? And if you can (which you cannot, btw), then also prove to us all how other parts suppliers could not have sprung up in their place and employed just as many Americans?
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Oh no, DA has posted his " unbiased, factual proof " narrative. And he bolded it. the funny thng is when you do post "unbiased, factual proof " sources, he just posts "nuh uh". watch

er uh DA, the " unbiased, factual proof " is that the other auto companies supported the bailout for exactly that reason.
"
Ford’s own plan stressed that its ability to survive a recession and return to profitability was not only contingent on how well the total market performs, but also on the short term survival of its domestic competitors, because “Our industry is an interdependent one. We have 80% overlap in supplier networks,” plus many dealers also have operations selling GM or Chrysler products. Accordingly, Ford requested a “stand-by” line of credit of up to $9 billion as “a back-stop to be used only if conditions worsen further and only to the extent needed
"
http://www.fas.org/sgp/crs/misc/R40003.pdf

Just be aware that his " unbiased, factual proof " narrative has never ever applied to his posts even when you asked him. now lets prove what a flaming hypocrite DA is. DA, please provide "unbiased, factual proof " of this

The auto bailouts were a disaster. They probably saved ZERO jobs.
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Vern said:
Oh no, DA has posted his " unbiased, factual proof " narrative. And he bolded it. the funny thng is when you do post "unbiased, factual proof " sources, he just posts "nuh uh". watch

er uh DA, the " unbiased, factual proof " is that the other auto companies supported the bailout for exactly that reason.
"
Ford’s own plan stressed that its ability to survive a recession and return to profitability was not only contingent on how well the total market performs, but also on the short term survival of its domestic competitors, because “Our industry is an interdependent one. We have 80% overlap in supplier networks,” plus many dealers also have operations selling GM or Chrysler products. Accordingly, Ford requested a “stand-by” line of credit of up to $9 billion as “a back-stop to be used only if conditions worsen further and only to the extent needed
"
http://www.fas.org/sgp/crs/misc/R40003.pdf

Just be aware that his " unbiased, factual proof " narrative has never ever applied to his posts even when you asked him. now lets prove what a flaming hypocrite DA is. DA, please provide "unbiased, factual proof " of this
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Ummm...well, I give you credit for a providing a link. Way more then Kush could manage.


But a) the link is from the government. It was 'Prepared for Members and Committees of Congress'...I hardly think that qualifies as unbiased.


And b), the man that coordinated the report, Bill Canis, is Executive Director, The Manufacturing Institute and is part of the National Association of Manufacturers.

Do you really think this guy will write a report that comes out against U.S. manufacturing jobs being bailed out?

Again, he is INCREDIBLY biased on this subject.


And c) I saw nothing in my brief glancing at the report that factually proved what Kush stated.
 
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Lutherf said:
One of the benefits to owning debt instead of equity is that you get paid back out of the proceeds from liquidation. The bond holders may not have been made completely whole but they would definitely not have been holding worthless paper.
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oh luther, bonds are not secured. And the thing that completely disproves the "narrative" you are desperately trying to cling to is that GMs bonds were trading for almost nothing before the bailout.

On the morning the IPO was released to trade, the GM benchmark 8 3/8% bonds were trading at 34 to 35 cents on the dollar, a far cry from May of 2009, when they hit bottom at approximately 1.5 cents.

https://www.fmsbonds.com/news-and-perspectives/gm-bondholders-a-view-from-the-back-seat/

so again, what value bondholders got, they got because of the bailout. If GM had been liquidated, bondholders would have gotten nothing because secured debt holders get paid first.

In the 80's all that happened is that the government backed a couple of billion in loans to Chrysler. They didn't actually bail them out though the DoD did buy a ton of K cars that helped Chrysler pay off the loans.
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er uh Luther, when you try to post details of the bailout from the 80s you lose the ability to pretend not to know about it. And I see you've decided to ignore the other "precedents" also. so in case you are trying to pretend not to know, anyone one of the many "precedents" shreds your "precedent" narrative. And you posting about the DoD buying K cars is referred to as"leakage". Its when a subject starts babbling on instead of addressing the issue.

so to be clear, if GM is liquated as you say you wanted, bondholders would have gotten nothing. You simply cant post words to change the facts.
 
faithful_servant said:
Had that bailout never happened, GMC would have still been running, it just would have gone through some re-organization and we'd still be seeing 2016 Corvettes...
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Not sure how one knows that but, ok if you say so.
 
KevinKohler said:
I disagree completely.


We just wouldn't be driving chevis, and those supporting companies would be selling ford, Chrysler, Toyota, Honda, etc, more parts.
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OK, but do you think it saved thousands of jobs or not?
 
Vern said:
oh luther, bonds are not secured. And the thing that completely disproves the "narrative" you are desperately trying to cling to is that GMs bonds were trading for almost nothing before the bailout.

On the morning the IPO was released to trade, the GM benchmark 8 3/8% bonds were trading at 34 to 35 cents on the dollar, a far cry from May of 2009, when they hit bottom at approximately 1.5 cents.

https://www.fmsbonds.com/news-and-perspectives/gm-bondholders-a-view-from-the-back-seat/

so again, what value bondholders got, they got because of the bailout. If GM had been liquidated, bondholders would have gotten nothing because secured debt holders get paid first.



er uh Luther, when you try to post details of the bailout from the 80s you lose the ability to pretend not to know about it. And I see you've decided to ignore the other "precedents" also. so in case you are trying to pretend not to know, anyone one of the many "precedents" shreds your "precedent" narrative. And you posting about the DoD buying K cars is referred to as"leakage". Its when a subject starts babbling on instead of addressing the issue.

so to be clear, if GM is liquated as you say you wanted, bondholders would have gotten nothing. You simply cant post words to change the facts.
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Your snide remarks and sarcasm aside, the GM bonds you're talking about are NEW GM bonds. It's a whole different entity from the GM in the 80's. Furthermore, bond holders DO get first crack at revenues from liquidation.

If you want to actually discuss the topic I'm game (after my poker game) but if all you want to do is play passive aggressive games I'm done.
 
DA60 said:
Ummm...well, I give you credit for a providing a link. Way more then Kush could manage.

But a) the link is from the government. It was 'Prepared for Members and Committees of Congress'...I hardly think that qualifies as unbiased.

And b), the man that coordinated the report, Bill Canis, is Executive Director, The Manufacturing Institute and is part of the National Association of Manufacturers.
Do you really think this guy will write a report that comes out against U.S. manufacturing jobs being bailed out?
Again, he is INCREDIBLY biased on this subject.
And c) I saw nothing in my brief glancing at the report that factually proved what Kush stated.
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Da, let's ignore your ridiculous deflections about Kush and focus on this: Ford said what Ford said. Flailing about the link to dispute what Ford said is almost as ridiculous as flailing about Kush. And DA, I don't see you posting " unbiased, factual proof " for your "narratives". We both know you cant. Hey I know, whine about Kush again. Maybe it'll work this time. anyhoo, Ford supported the bailout because of their concerns for their suppliers.

Ford avoided the bankruptcies that engulfed GM and Chrysler but supported its rivals in their requests for U.S. government funding that also helped to prevent a collapse of the auto parts supply base.

More unbiased, factual proof | Reuters
 
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Lutherf said:
Your snide remarks and sarcasm aside, the GM bonds you're talking about are NEW GM bonds. It's a whole different entity from the GM in the 80's. Furthermore, bond holders DO get first crack at revenues from liquidation.

If you want to actually discuss the topic I'm game (after my poker game) but if all you want to do is play passive aggressive games I'm done.
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Luther, "wah wah passive aggressive" is simply you setting the stage for your eventual exit rather than admit you were wrong. The GM bonds were not secure. Secure is like a mortgage (don't get me started on mortgages), something that has collateral. So play your poker (where passive aggressive is a great strategy) and take your time so you can respond with what is true not with what you want to believe. And Luther, the reason you think bondholders were secure is because the conservative media told you they were. They were lying.

Bank lenders owed $5.4 billion would recover from 26.3 to 77.1 cents on the dollar. The United States Treasury, on the hook for $20.5 billion, fares even worse under this scenario, getting just 12.7 cents to 23.7 cents on the dollar for its claims. Unsecured creditors would get nothing.

http://dealbook.nytimes.com//2009/06/05/imagining-a-gm-fire-sale/

And pointing out that your "precedent" narrative is shredded is neither snide nor passive aggressive. Its simply a fact.
 
Incisor said:
Japan's debt-to-GDP ratio was 1000%. We are nowhere near that, nor will we ever be. Right now, our debt-to-GDP ratio is about 90%. That's come down as taxes have been raised and the economy recovers.
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Actually the last time I checked it was 229 %, but thats not really the point. The point was to reference Japans text book application of Keynesian Fiscal Stimulus as a example of the failure of stimulus to bootstrap economic growth and sustain a market driven economy.

Its one hell of a example too. If you look at Japans GDP from 1990 to 2001 it basically tracks our GDP. Japans a export economy and they're highly dependent on the American consumers to sustain their economy. When we suffer, so do they as do other export economies.

Japan refused to address ( and still refuses to address ) underlying structural issues so they're solution was essentially to paper over those issues with massive debt and since Fiscal stimulus is a purely ideological driven initiative they tried 10 different stimulus packages over 10 years. 10th times the charm....

Obama did the same, instead of addressing SUBSTANTIAL underlying issues he chose to paper over the lack of new capital investment in our economy with new debt. Obama's a left wing ideologue, which means he refused to acknowledge the underlying issues that led to Trillions of dollars in investment capital to sit idle .

Under Obama Banks would rather sit on over 4 Trillion dollars in liquidity earning next to nothing ( 0.5 % ) than risk it in a Obama economy and Corporations and private investors did the same. Its why ideologues are so dangerous when they're allowed into a position of power.

Venezuela's Maduro would rather his people go without basic goods and services than acknowledge that Socialism and corruption created that mess. Greece's Tsipras would rather try to conn Germany out of 300-400 billion euros by claiming Germany owed Greece " war reparations " rather than pay back its debt to Germany and acknowledge that Greece ran out of other peoples money and Obama would rather pump out BS jobs numbers and ObamaCare propaganda than do whats needed to get our economy going again
 
Incisor said:
Debt doesn't matter, and that was the whole scandal behind the Rogoff-Reinhart paper that was used by Conservatives to justify austerity, which was their ultimate goal. The only thing government debt affects is the government's ability to borrow...and right now, even with high-ish debt, borrowing rates for the government are still very low. Now is the time to borrow in order to jump start the economy, but Conservatives don't want that. They want us to sink deeper into debt, which is why all they do is propose tax cuts.
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I'll play. What is the reason for supporting austerity and a balanced budget, if there's no reason not to? What are conservatives getting out of it?
 
Kushinator said:
Some said the same thing in 1945, when debt-to-gdp was above 100%, at $260 billion.
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Lol...I love seeing this type of comment. It's born out of so much ignorance is laughable. We could have run our economy on a hamster wheel after WW2 and we would have dominated the world. We were literally the only show in town. The rest of the modern world had their infrastructure bombed to hell and generations of working aged males killed. We could do whatever we wanted and been amazing.

Guess what? People had kids and rebuilt their countries. There is more competition now than ever. We can't continue to run our economy however we want anymore. The fact that this dynamic eludes you is amazing.
 
JohnfrmClevelan said:
And this is the problem with debating with conservatives. You take a stand, based on zero real-world evidence, and you refuse to accept any data or proof that proves you incorrect.

How did you come to the conclusion that a high debt-to-GDP ratio was detrimental in the first place? Let's get to the root of your problem...
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Yeah...pesky conservatives taking a stand on math and economic realities. So dumb!
 
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